U.S. durable goods orders disappoint

Most U.S. companies cut back investment in big-ticket equipment and machines in July from the month earlier, the Commerce Department reported Wednesday.

Overall durable good orders actually rose 0.3 per cent, but only because of a 76 per cent jump in commercial aircraft.

Markets had expected a three per cent increase.

Once that volatile sector was stripped out, orders for goods designed to last for more than three years fell by 3.8 per cent,their steepest rate since January and short of the 0.5 per cent increase many economists had expected.

Orders by businesses for capital goods such as equipment used in production fell by eight per cent,their sharpest drop since January 2009, when the economy was stuck in the deepest recession in decades.

Economists track durable goods orders as a key measure of economic recovery.

"Equipment and software investment, which has itself been responsible for 30 per cent of the total growth in real GDP seen over the last year, is likely to see slower growth in the quarter ahead,Alistair Bentley, an economist with TD Economics, said in a commentary.

"While we continue to believe the U.S. recovery is in tact, the pace of growth has certainly slowed," he said.

The report came the same day that the Commerce Department reported that U.S. new home sales fell 12.4 per cent in July from the month earlier to a seasonally adjusted annual sales pace of 276,600.

That was the slowest pace on records dating back to 1963.

"The rebound in manufacturing was one of the bright spots in an otherwise disappointing recovery," said Paul Ashworth, senior U.S. economist at Capital Economics.

"Take it away, throw in a relapse in housing, and you don't have much left."