U.S. June Durable Goods Orders Rise Surprises Analysts

July 25, 2008 11:50 a.m. EST

Washington, D.C. (AHN) - U.S. durable goods orders unexpectedly increased at the fastest pace for the second time this year in June after rising in February by 1.1 percent, according to a government report released on Thursday.

The upturn momentum to the new orders for U.S.-made capital goods in the month of June was added by defense spending amid slowdown in the global economy.

Additional rise came after an auto-industry strike was ended, which had forced several plants closings across the country a few months ago, the report said.

General Motors said it had returned to full production by June 16 after a strike ended at American Axle & Manufacturing Holdings Inc., the largest axle supplier for General Motors Corp.

According to the Commerce Department's report released on Friday, the increase was also led by the orders for primary metals, machinery and electrical equipment

The orders for U.S.-built durable goods increased by 0.8 percent in June compared to an upwardly revision of 0.1 percent in May. It had slipped by as much as 4.4 percent in January.

The Wall Street market analysts had projected the Orders for durable goods orders to decrease by about 0.3 percent during the last month.

Increase in the demand for big-ticket items in the U.S. came from the 1.4 percent rise in orders for non-defense capital goods excluding aircraft, a measure of future business investment.

Excluding the drop in transportation equipment orders, orders for durable goods increased by 2.0 percent in June following a 0.5 percent decline in prior month.

Machinery sales, which declined with a double-digit figure in February and dropping by 3.7 percent, retreated up by 2.3 percent during the last month. Transportation goods orders fell 2.6 percent after increasing by 1.9 percent.

While, the Pentagon ordered as much as 8.6 percent decrease in orders for military planes as well as orders for commercial aircraft plunged by 25.1 percent.

Primary metals orders surged by 5.1 percent in June after slipping by 1.8 percent in May, shipments increased by 2.8 percent after falling 1.4 percent.