US business spending plans, durable goods orders rise

WASHINGTON (REUTERS) - A gauge of planned business spending in the United States rose more than expected last month, and new orders for long-lasting manufactured goods surged, offering tentative signs of a pickup in economic activity.

The Commerce Department said on Thursday non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.7 per cent after rising by a revised 2.2 per cent in May. Economists had expected this category to rise by only 0.5 per cent after a previously reported 1.5 per cent gain in May.

Orders for long-lasting manufactured goods jumped 4.2 per cent as demand for goods ranging from aircraft to machinery improved. Orders for these goods, which range from toasters to aircraft, had increased by a revised 5.2 per cent in May.

The gains in both the so-called core capital goods and durable goods orders were consistent with other manufacturing data that have suggested factory activity is regaining some momentum after hitting a soft patch earlier this year. The sustained gains bolster expectations of a reacceleration in economic growth in the second half of the year.

Last month, shipments of core capital goods - used to calculate equipment and software spending in the gross domestic product report, fell 0.9 per cent. That followed a 1.9 per cent increase in May and pointed to moderate growth in business spending on capital equipment in the second quarter.

Demand for transportation equipment increased 12.8 per cent, buoyed by a surge in orders for civilian aircraft. Boeing received orders for 287 aircraft, adding to May's 232 tally, according to information posted on its website. Orders for motor vehicles advanced 1.3 per cent after falling 0.8 per cent the prior month.

Orders excluding transportation were flat. There were gains in orders for machinery and fabricated metal products. However, orders for computers and electronic products, and electrical equipment, appliances and components fell.