US factory orders in June exceed expectations; corporate spending on equipment is solid Reuters

© Reuters. File photo: Autonomous robots assemble the X-type SUV at the BMW manufacturing plant in Greer, South Carolina, USA on November 4, 2019. REUTERS/Charles Mostoller

WASHINGTON (Reuters)-New orders for US-made goods rose more than expected in June, and firm spending on equipment has shown that manufacturing continues to strengthen even as spending is shifting from goods to services.

The US Department of Commerce said on Tuesday that factory orders rose 1.5% in June, following a 2.3% increase in May. Economists surveyed by Reuters had expected factory orders to increase by 1.0%.

Orders increased by 18.4% year-on-year. During the COVID-19 pandemic, as millions of Americans were trapped at home, demand shifted to commodities, which promoted manufacturing, which accounts for 11.9% of the US economy. But the surge in demand has strained the supply chain.

The American Institute of Supply Management reported on Monday that the growth rate of manufacturing activity in July slowed for the second consecutive month due to continued shortages of raw materials. However, the survey showed that the bottleneck of the supply chain is beginning to ease.

Since nearly half of the population has been fully vaccinated against COVID-19, expenditures are being redirected to the service industry, which enables people to travel, visit restaurants, visit casinos, and participate in sporting events, and these service-related activities started in the early stages of the pandemic. Was contained.

Orders for factory goods increased extensively in June, with significant increases in machinery, computers and electronic products, as well as electrical equipment, appliances and parts. Orders for transportation equipment increased by 2.0%.

The US Department of Commerce also reported that orders for non-defense capital goods, excluding aircraft, rose steadily by 0.7% in June, instead of the 0.5% reported last month.

Shipments of core capital goods used to calculate business equipment expenditures in the GDP report increased by 0.6% last month.

Enterprise equipment spending was strong in the second quarter, achieving double-digit growth for the fourth consecutive quarter. This has contributed to the GDP level being much higher than the peak in the fourth quarter of 2019.

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