New orders for durable goods dropped 7.3% to $226.6 billion for July, according to a Commerce Department report (link opens as PDF) released today. It's the steepest drop in nearly a year.
After aircraft orders helped pushed June's new orders up a revised 3.9%, July's decrease proved much larger than expected. Overall, analysts had predicted a milder 4% slump. Durable goods are items meant to last at least three years.
Excluding volatile transportation orders (which include aircraft), July's numbers look better, but not great. Analyst expectations called for 0.3% growth, but this newest report indicates 0.6% contraction.
With new orders down, shipments also tapered off 0.3% after a 0.1% slump the previous month. While shipments are down three of the last four months, unfilled orders increased 0.4% in July for the fifth increase in six months. Both unfilled orders and inventories (up 0.4%) are at their highest levels recorded since data was first collected in 1992.
Economists tend to focus on orders for so-called core capital goods. Those orders fell 3.3%, but the drop followed four straight months of gains. Core capital goods are considered a good measure of businesses' confidence in the economy. They include items that point to expansion -- such as machinery, computers and heavy trucks -- while excluding volatile orders for aircraft and defense.
-- Material from The Associated Press was used in this report.