Durable goods orders will increase by 7.3% in June as the automaker’s increase offsets Boeing’s weakness
The numbers: Durable goods orders of at least three years rose sharply in June for the second consecutive month after the historic decline in early spring, but momentum may be difficult to sustain following more coronavirus cases and somewhat stricter government restrictions.
Orders were up 7.3% last month, the government said Monday. Economists in Wall Street expected a 7% increase.
What happened: Orders for new cars and trucks rose 86% last month as automakers overtook more lost ground after being slammed early in the pandemic. However, orders in the first half of 2020 are still 25% lower than in the same period a year earlier.
Aircraft builders showed a whopping 462% fewer bookings. Boeing BA,
has seen demand for its aircraft dry up after diving into global travel during the corona virus outbreak. The company only booked one order in June and received nearly 200 cancellations.
The company has also struggled to put its grounded 737 Max jets back into service after a few fatalities in 2019.
Read:Durable goods orders will increase by 7.3% in June as the automaker’s increase offsets Boeing’s weakness
When cars and planes were stripped, orders rose by a modest 3.3%.
The number of bookings increased for primary metals, fabricated metal parts and heavy machinery. They dropped slightly in front of computers.
Still, corporate investment before the pandemic had weakened, largely due to a major trade war between the U.S. and China, and there is little reason to expect a major setback soon, economists say. Investments are lagging behind the pace of last year.
The big picture: Momentum in production in May and most of June may begin to wane after a new wave of coronavirus cases, but gains are unlikely to be reversed unless there is a new wave of shutdowns across the country.
However, progress will be much slower until the coronavirus is contained.
What do they say? “Opening up the country brought life back into the economy and the return of jobs, which is critical,” said senior economist Jennifer Lee of BMO Capital Markets. ‘But opening it up also brought the virus back into communities, and that alone is the biggest risk to this recovery. ”
Market response: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
opened higher in Monday trading.