New orders for U.S.-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%, the Commerce Department said on Thursday. Data for June was revised slightly lower to show factory orders advancing 0.5% instead of climbing 0.6% as previously reported.
Economists polled by Reuters had forecast factory orders would increase 1.0% in July.
Factory orders gained 0.4% compared to July 2018.
Pointing to underlying weakness in the sector, which accounts for about 11% of the economy, shipments of manufactured goods fell 0.2% in July after edging up 0.1% in the prior month. Unfilled orders at factories were unchanged after dropping 0.6% in June. Inventories increased 0.2% after rising 0.1% 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% in July, the largest increase since August 2018, after advancing 4.1% in June. Orders for civilian aircraft and parts increased 47.8% after soaring 101.4% 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% after rising 1.7% in June.
The Commerce Department also said July orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.2% instead of the 0.4% 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% in July instead of declining 0.7% as previously reported.
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