Durable Goods Orders Surprise With Increase In August

U.S. orders for products meant to last at least three years unexpectedly rose in August, boosted by demand for defense equipment.

Durable goods orders increased 0.2% in August from July to a seasonally adjusted $284.7 billion, the Commerce Department said in a statement Wednesday. It was the fifth gain in six months. Economists surveyed by Reuters had forecast a drop of 0.5% last month.

In July, orders fell 5.6%, the biggest decrease since the aftermath of the Covid-19 outbreak in April 2020, pressured by a significant drop in demand for transport equipment. The number was revised from an initial negative reading of 5.2%.

New orders of defense aircraft and parts jumped 19% in August from July. U.S. support to Ukraine is boosting purchases of military equipment.

Excluding defense equipment, orders in August fell 0.7%, signaling that U.S. manufacturing is still struggling.

Durable goods orders are considered a strong indicator of the state of the economy. Because they're more expensive, they tend to be purchased when consumers and companies are more confident about the future of the economy. A drop in orders usually indicates pessimism.