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US factory orders increase for second straight month

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New orders for US-made goods rose for a second straight month in July as orders for transportation equipment increased by the most in nearly a year, but the gains were unlikely to be sustained as trade tensions erode business confidence.

[WASHINGTON] New orders for US-made goods rose for a second straight month in July as orders for transportation equipment increased by the most in nearly a year, but the gains were unlikely to be sustained as trade tensions erode business confidence.

Factory goods orders jumped 1.4 per cent, the Commerce Department said on Thursday. Data for June was revised slightly lower to show factory orders advancing 0.5 per cent instead of climbing 0.6 per cent as previously reported.

Economists polled by Reuters had forecast factory orders would increase 1.0 per cent in July.

Factory orders gained 0.4 per cent compared to July 2018.

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Pointing to underlying weakness in the sector, which accounts for about 11 per cent of the economy, shipments of manufactured goods fell 0.2 per cent in July after edging up 0.1 per cent in the prior month. Unfilled orders at factories were unchanged after dropping 0.6 per cent in June. Inventories increased 0.2 per cent after rising 0.1 per cent in June.

A survey on Tuesday showed a measure of national factory activity contracted for the first time in three years in August, with manufacturers saying there had been "a notable decrease in business confidence," and that "trade remains the most significant issue."

The United States and China slapped fresh tariffs on each other's imports on Sunday as the year-old trade war continued with no signs of resolution.

Troubles in manufacturing have been highlighted by factories reducing hours and overtime for employees in July.

Transportation equipment orders surged 7.0 per cent in July, the largest increase since August 2018, after advancing 4.1 per cent in June. Orders for civilian aircraft and parts increased 47.8 per cent after soaring 101.4 per cent in June.

The strong gains in aircraft orders are likely temporary as Boeing's 737 MAX plane remains grounded after two fatal crashes in Indonesia and Ethiopia.

There were also increases in orders for computers and electronic products, and electrical equipment, appliances and components. But machinery orders fell 0.8 per cent after rising 1.7 per cent in June.

The Commerce Department also said July orders for non-defence capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.2 per cent instead of the 0.4 per cent rise reported last month.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, fell 0.6 per cent in July instead of declining 0.7 per cent as previously reported. 

REUTERS