U.S. durable goods orders rise for 2nd straight month; jobless claims fall again
New orders for U.S. manufactured capital goods rose for a second straight month in July as demand for machinery and a range of other products picked up, offering a tentative sign that a business spending downturn was starting to ease.
The economic outlook also was boosted by another report on Thursday showing an unexpected drop in the number of Americans filing for unemployment benefits last week, indicating sustained labor market strength.
Together, the data support the view that the Federal Reserve will raise interest rates in December. Fed Chair Janet Yellen could give guidance on the near-term outlook for U.S. monetary policy when she speaks on Friday at a global central bankers’ conference in Jackson Hole, Wyoming.
“This kind of data are consistent with what the Fed is looking for in terms of the labor market and economic growth. If we get more data like this, that will suggest we are likely to see an interest rate increase, most likely in December,” said Gus Faucher, senior economist at PNC Financial Services Group.
The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.6 percent last month, the largest gain since January.
These so-called core capital goods orders advanced 0.5 percent in June. The rise in July marked the first back-to-back gain since January 2015. Economists polled by Reuters had forecast core capital goods orders rising only 0.3 percent last month.
There were hefty increases in orders for machinery, primary metals, fabricated metal products, computers and electronic products, as well as electrical equipment, appliances and components.
U.S. financial markets were little moved by the data as investors were focusing on Yellen’s upcoming speech. The dollar .DXY was trading marginally lower against a basket of currencies, while U.S. stocks were largely unchanged. Prices for U.S. government bonds fell slightly.
The U.S. central bank raised interest rates at the end of last year for the first time in nearly a decade, but has held them steady so far in 2016 amid concerns over persistently low inflation. Most economists expect another rate hike in December.
