The numbers: Orders for durable goods lasting at least three years surged 11.2% in July largely because of strong consumer demand for new cars and trucks, but business spending outside the auto industry was softer and investment slowed.
The increase in orders last month easily topped the 4.8% forecast of economists surveyed by MarketWatch.
Yet demand for industrial goods grew far more slowly if autos and planes are excluded. New orders rose a smaller 2.4% minus transportation, the government said Wednesday. Big ups and downs in transportation often distort the underlying pace of demand.
New orders remain well below precrisis levels.
What happened: Orders for new cars and trucks jumped 22% last month after a nearly 24% gain in June.
Auto sales have been surprisingly strong during the summer as Americans took advantage of low interest rates and discounted pricing. But orders are likely to slow soon now that plants have reopened and auto manufacturers are operating closer to normal capacity.
Airline orders were not available as they normally are. Boeing BA, -1.98% has suffered hundreds of cancellations and received very few orders for new planes this year after travel around the world plunged. The company had already been under severe financial strain after the grounding of its 737 Max plane following a pair of deadly crashes last year.
The future isn’t looking much better. American Airlines on Tuesday said it would lay off or furlough 19,00 workers because so few people are flying.
Orders for most other industrial goods rose, but more slowly. Bookings increased 4% for electrical equipment including appliances, 2% for fabricated-metal parts, 2% for machinery and 2% for computers and electronics.
A key measure of business investment, known as core orders, edged up 1.9% last month. These orders exclude defense and transportation.
Business investment, already weak before the pandemic, is unlikely to recover much until the virus is brought under control at home and abroad. The diseases has wreaked havoc on the global trading system and forced businesses to preserve cash in case the economy worsens.
The big picture: Auto and most other American manufacturers have rebounded smartly from the pandemic and fared better than the much larger service side of the economy, but they can’t grow significantly faster until the U.S. and rest of the world contain the virus and start to return to normal. It could take a year or more before that’s the case,