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Strong aircraft sales mask July weakness for US durable goods

By AFP - Aug 26,2019 - Last updated at Aug 26,2019

WASHINGTON — A continued rebound in sales of American planes lifted the US durable goods sector for the second straight month in July, according to data released on Monday.

But the increase in sales of big-ticket US-made goods, the largest jump in nearly a year, hid weaker-than-expected results in the rest of the sector amid President Donald Trump’s worsening trade war.

A measure widely seen as a proxy for business investment, which has suffered since late last year, rose for the third month in a row, but at a sluggish pace and economists said the numbers clearly point to a slowing trend.

New orders for durable goods rose by a better-than-expected 2.1 per cent in July to $250.4 billion, the largest increase since August of last year, according to the Commerce Department.

But June’s result was revised downward slightly from a prior estimate. 

 So far this year, orders are up a paltry 0.3 per cent over the same period in 2018.

Sales of civilian aircraft rose for the second straight month, with US giant Boeing continuing to recover from a drought in orders. The company’s top-selling 737 MAX remains grounded worldwide following deadly crashes.

Auto sales slowed to a 0.5 per cent gain after a stronger May and June.

But outside the volatile transportation sector, sales fell 0.4 per cent, undershooting economists’ expectations as orders for machinery and metal goods sank while computer sales were flat.

“Through the volatility, trends have slowed significantly,” Jim O’Sullivan of High Frequency Economics said in a note to clients.

“The manufacturing sector is disproportionately exposed to weakening in foreign demand.”

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