WASHINGTON -- Orders to U.S. factories increased in June, and a key category that reflects business investment plans posted a modest rise. But the gains weren't robust enough to suggest that the sluggish manufacturing sector is seeing a significant turnaround.
Factory orders advanced 1.8 percent in the month, the Commerce Department reported Tuesday. The jump, however, was fueled by a surge in demand for commercial aircraft, a volatile sector that can swing widely from month to month.
The increased orders were in line with forecasts from economists surveyed by Bloomberg. Reports on the services industries and monthly payrolls are also scheduled for release later this week, giving investors a gauge on the strength of the economy.
Tuesday's Commerce Department report said a key category that serves as a proxy for business investment plans edged up 0.7 percent after declines in April and June. For the first half of the year, this category is down 3.5 percent from the same period a year ago and has dragged overall economic growth.
Manufacturing has been held back this year by a rising dollar and falling oil prices. The higher value of the dollar against foreign currencies makes U.S. goods more expensive and less competitive in major export markets. The lower oil prices have led energy companies to scale back their investment plans.
The price of West Texas Intermediate crude for September delivery rose 57 cents, or 1.3 percent, to settle Tuesday at $45.74 a barrel on the New York Mercantile Exchange. The price fell to $45.17 on Monday, the lowest close since March 19.
The government reported last week that the overall economy as measured by the gross domestic product grew at a 2.3 percent annual rate in the April-June quarter, an improvement from a slight 0.6 percent GDP increase in the first quarter. The rebound was powered by consumer spending.
But business investment contracted at an annual rate of 0.6 percent in the second quarter, reflecting big declines in equipment spending by various industries and a 68.2 percent drop in the category that covers oil and gas exploration and drilling activities.
Economists are hopeful that overall economic growth will revive further to around 3 percent in the second half of the year as continued gains in employment bolster consumer spending. They expect strength in the consumer sector will be enough to offset weakness in manufacturing.
Demand for durable goods, items expected to last at least three years, increased 3.4 percent in June, matching the estimate made last week in a preliminary report. Orders for nondurable goods such as chemicals, paper and clothing, rose 0.4 percent after no increase in May.
The Commerce Department on Monday reported consumer spending in June rose by the smallest amount in four months as shoppers cut back on purchases of big-ticket items.
Consumer spending edged up 0.2 percent in June, the poorest showing since a similar increase in February.
Information for this article was contributed by Martin Crutsinger of The Associated Press and by Joseph Ciolli and Mark Shenk of Bloomberg News.
Business on 08/05/2015