Orders for US Durable Goods Surge in June, Analysts See “Glimmer of Hope”

Orders for US factories for big ticket manufactured goods posted a sizeable gain in June but advance was mostly fuelled by higher demand for commercial aircrafts. According to a report released by the US Commerce Department it was stated that orders for durable goods jumped by 3.4 percent in June as compared to a fall of 2.1 percent seen in May. It is important to state that the reading is the best reading since March. It is imperative to state that the jump was driven mostly by aircraft orders booked by Boeing at the Paris Air show earlier last month.

A gauge of  US business investment plans rebounded solidly in June, suggesting the drag on manufacturing from capital spending cuts was starting to ebb and is being seen as a huge positive by investors and analysts on the street. It was also reported by the Commerce Department it was stated that non-defence capital goods orders excluding aircrafts, a closely watched proxy for business spending plans, increased 0.9 percent last month after an unrevised 0.4 percent drop in May. It is imperative to state that the increase followed two straight months of declines.

US manufacturers have struggled this year from the effects of a strong dollar and a plunge in energy prices. The higher value of the dollar against major currencies makes US goods more expensive and less competitive in major export markets while the lower oil prices have led energy companies to scale back investment plans. Analysts are looking at the report as a glimmer of hope and believe that the second half of the year can see stronger business investments and is being seen as a huge positive. All eyes are on the FOMC meeting which begins on Tuesday and ends with the release of the FOMC minutes on Wednesday.