- Daniel Silver, an economist at JPMorgan
New orders for US factory goods recovered strongly in June amid robust demand for transportation equipment and other goods, a positive sign for the nation's struggling manufacturing sector. According to the Commerce Department, new orders for manufactured goods surged 1.8% following the 1.1% decline in May. Factory activity was hurt by a strong US Dollar as well as spending cuts in the energy sector after last year's steep drop in crude oil prices. Weak global demand also weighed on business activity in the manufacturing sector, which makes up 12% of the US economy. Even though there are signs that the energy spending drag is waning, the Greenback strength will likely to remain a hurdle. The US Dollar has risen 15% versus major counterparts since June 2014. Orders for transportation equipment soared 9.3% in June, reflecting a 65.4% surge in aircraft bookings.
The Commerce Department also reported orders for non-defense capital goods excluding aircraft, considered as a measure of business confidence and spending plans, rose 0.7%, compared with the 0.9% increase reported last month. Shipments of core capital goods, used to calculate business equipment spending in the GDP data, climbed 0.3% in June. Manufacturing inventories grew a solid 0.6%, which was more than the government estimated in its second-quarter GDP report published last week.
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