WAHINGTON: A spike in demand for transport quipment sent US durable goods orders blowing past expectations with an 11.2% gain in July, the Commerce Department said today.

It was the third consecutive monthly gain in demand for big-ticket manufactured products, with orders up to US$230.7 billion (RM962 billion) in July following June's upwardly revised 7.7% climb.

That brought the amount closer to the level posted in February 2020 before the coronavirus pandemic hit, but it was all thanks to the strength of transport equipment, which in July surged 35.6% to US$74.7 billion.

Motor vehicles and parts formed the majority of that gain, with new orders up 21.9%, while defence aircraft and parts, a smaller component of transport, jumped 77.1%.

However, in a sign of the continued troubles at Boeing, which has struggled amid slumping travel demand and the global grounding of its best-selling 737 MAX plane, orders for non-defence aircraft and parts fell last month, reflecting customers cancelling orders from the aerospace giant.

Excluding transport, the gains were more tepid, with durable goods orders up only 2.4%. Excluding defence, the gain was 9.9%.

The data reflects the continued reopening of factories across the United States following shutdowns caused by the coronavirus pandemic in mid-March. Manufacturers are easing back online with social distancing enforced to prevent infection.

Ian Shepherdson of Pantheon Macroeconomics said the automotive sector has a ways to go to recover its prior health given that orders were cumulatively US$81 billion lower over the past five months, even with the boom in July.

"This won't be recovered anytime soon, given the continued depression in fleet auto sales, even though private consumers are buying as many cars and trucks as before the pandemic," he said in an analysis.

And though the "core" capital goods category of nondefense goods excluding aircraft grew 1.9 percent in July, bringing it just a percentage point shy of its level before the pandemic, Shepherdson said, "It's hard to see a full recovery anytime soon, given the devastation in the leisure, travel, hospitality and retail sectors." – AFP