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Orders placed with U.S. factories up 1.5 percent

Published August 2, 2013 8:55 am

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

WASHINGTON • Orders placed with U.S. factories rose to a record high in June, boosted by strong demand for airplanes, machinery and autos.

Factory orders rose 1.5 percent in June compared with May, when orders had risen 3 percent, the Commerce Department reported Friday. The gains pushed total orders to a record $496.7 billion.

It was the second month that factory orders have been at an all-time high, surpassing the previous record set in June 2008. Demand for factory goods had plunged during the recession.

Orders in a key category that tracks business investment rose 0.9 percent in June, the fourth consecutive monthly gain.

Manufacturing struggled in the early part of this year, held back by weaker global growth and steep government spending cuts. But those trends may be starting to reverse.

Orders for durable goods, items expected to last at least three years, rose 3.9 percent in June. That represented a slight downward revision from a preliminary report which had put the increase at 4.2 percent.

Orders for nondurable goods such as chemicals, paper and food fell 0.6 percent in June after a 0.8 percent increase in May.

Demand for machinery increased 2.6 percent in June, led by a 44.1 percent surge in oil and gas drilling equipment.

Demand for transportation products rose 12 percent, reflecting a 32.1 percent jump in orders for commercial aircraft. Demand for autos was up 2 percent.

Aircraft orders are volatile from month to month. Boeing said it received orders for 287 planes in June, up from 232 in May. Excluding transportation goods, orders fell 0.4 percent in June after a 1 percent rise in May.

The Institute for Supply Management reported Thursday that its index of manufacturing activity jumped to 55.4 in July. That was the fastest pace in two years and up from a June reading of 50.9. A reading above 50 indicates growth.

The gain in the index showed that factories revved up production to meet a surge of new orders in July.

Stronger growth at U.S. factories could aid a sluggish economy that has registered tepid growth over the past three quarters. And it could provide crucial support to a job market that has begun to accelerate but has added mostly lower-paying service jobs.

Businesses are placing more orders that are likely to be filled in the next few months. Steady gains in new-home sales and construction are supporting strong growth in industries such as wood products, furniture, and electrical equipment and appliances. And healthy auto sales are buoying growth in the production of metal parts and components.

Auto companies reported solid sales gains for July on Thursday. Ford, Chrysler and Nissan each saw sales grow 11 percent compared with the same month a year ago.

The economy grew at a lackluster 1.7 percent annual rate in the April-June quarter. That's better than the 1.1 percent rate in the first quarter, but it's still far too sluggish to quickly reduce unemployment.