Weak Factory Orders Indicate Stalling Economy

Weak Factory Orders Indicate Stalling Economy

Orders for big-ticket manufactured goods rose 0.3 percent in July but only because of a 76 percent jump in sales of commercial aircraft, the Commerce Department said.

Excluding the volatile transportation category, durable-goods orders fell 3.8 percent. Business orders for capital goods plunged 8 percent, the sharpest decrease since January 2009.

The numbers were worse than economists expected. Coupled with other recent data, the report provided new evidence that the economic recovery is losing steam. A report Tuesday estimated that sales of previously owned homes plunged 27 percent in July, the sharpest drop in decades.

By The Numbers: Cass Freight Index.

Factory orders and housing sales are closely watched barometers for freight activity. Recovery in manufacturing has buoyed a recovery in truck and rail traffic. Housing purchases influence imports of goods such as furniture and home furnishings.

Manufacturing has been a relatively bright spot in the economic recovery. Demand for durable goods has generally risen in recent months. Excluding transportation, manufacturing demand has risen in all but two months this year. July orders were 15.6 percent higher than a year earlier, in the depths of the recession.

Factories stepped up production to fill orders for businesses restocking inventories that were slashed during the recession. Companies and economists say the inventory-restocking surge has largely run its course, slowing demand for factory orders.

Inventories of manufacturing goods rose 0.6 percent in July, the seventh consecutive monthly increase. Machinery had the largest July increase in inventory levels, up 1.9 percent.

-- Contact Joseph Bonney at jbonney@joc.com.