In a sign that the factory made gains in the third quarter, orders for long-lasting U.S. manufactured goods rose 0.1% in August. The increase was driven by the strongest rise in vehicle orders since February, according to data from the Commerce Department.
The data also showed that shipments of non-military capital goods, other than aircraft, grew 1.3% during the month, snapping two straight months of declines. New orders for core durable goods, which are viewed as a gauge of business spending plans, rose 1.5% in August. Demand for new cars drove the overall gain in new orders of durable goods, which include everything from toasters to tanks. A majority of economists had expected overall goods orders to be flat.
The U.S. economy expanded at 2.5% annual rate in the second quarter, but many economists expect the pace will slow in Q3. Durable goods fell 8.1% in July, the booming housing market has cooled because of higher interest rates and the real unemployment rate remains elevated. Taking into account this data, Federal Reserve officials are among those revising downward their economic growth projections, as evidenced by the Fed's surprising move not to taper asset purchases at its September policy meeting.