Factory Orders Jumped Higher Than Expected in June

The rebound in U.S. manufacturing was even stronger in June than economists expected.

Demand for durable goods, those expected to last at least three years, rose 2 percent in June from the previous month, the Commerce Department said Thursday. Economists had expected just a half a percentage point improvement after two straight months of declines.

The headline number was boosted by soaring aircraft orders connected with the Paris Air Show. Airline orders had slumped in the prior two months thanks to the grounding of Boeing’s 737 MAX airplanes.

Orders for cars and parts were up 3.1 percent, also more than expected.

Excluding the volatile transportation category, durable goods orders rose 1.2 percent. That marks the second consecutive month of rising orders, confirming the rebound of U.S. factory activity seen in the New York and Philadelphia regional Fed surveys. Economists had been expecting a mere two-tenths of a percentage point improvement.

Core capital goods, a narrower category that is closely watched as a signal of the broader economy, climbed 1.9 percent, far better than the 0.2 percent forecast. This is a measure of business investment that excludes defense spending and aircraft.

The downturn in manufacturing this spring was even sharper than initially reported. May’s durable good orders, initially reported as a 1.3 percent drop, was revised to 2.3 percent decline.