(RTTNews) - Reflecting a continued spike in orders for transportation equipment, the Commerce Department released a report on Monday showing new orders for U.S. durable goods jumped much more than expected in the month of July.
The report said durable goods orders surged up by 2.1 percent in July following a downwardly revised 1.8 percent increase in June.
Economists had expected orders to climb by 1.1 percent compared to the 1.9 percent jump that had been reported for the previous month.
The much stronger than expected growth came as orders for transportation equipment spiked by 7.0 percent in July after surging up by 4.1 percent in June. Orders for transportation equipment plunged by 7.5 percent in May.
Orders for non-defense aircraft and parts and defense aircraft and parts soared by 47.8 percent and 34.4 percent, respectively.
Excluding the spike in orders for transportation equipment, however, durable goods orders fell by 0.4 percent in July after rising by 0.8 percent in June.
The pullback came as a surprise to economists, who had expected ex-transportation orders to inch up by 0.1 percent.
Notable decreases in orders for primary metals, fabricated metal products and machinery more than offset a jump in orders for electrical equipment, appliances and components.
Meanwhile, the report said orders for non-defense capital goods excluding aircraft, an indicator of business spending, rose by 0.4 percent in July after climbing by 0.9 percent in June.
Shipments in the same category, which is the source data for equipment investment in GDP, fell by 0.7 percent in July after coming in unchanged in June.
"The annual trend in core shipments cooled to its slowest pace since January 2017, indicating a subdued pace of real private business investment at the start of Q3," said a note from economists at Oxford Economics.
The economists added, "Looking ahead, the combination of tighter financial conditions, elevated trade uncertainty and deteriorating global growth will weigh on investment decisions in coming months, putting further downside risk to the already fragile business investment picture."