Orders for US-made big-ticket goods were flat in July after rising for four straight months on a slump in the volatile military aircraft category, according to government data released on Wednesday.
New durable goods orders held steady at $273.5 billion after demand for defense aircraft and parts fell nearly 50 percent — a segment that rose more than 80 percent in June, the Commerce Department reported.
The result was far worse than economists had forecast, but excluding the defense sector, orders rose 1.2 percent, the data showed.
Economists say companies are likely to pull back investment amid fears Americans are becoming more cautious about spending amid the highest inflation in 40 years, even as families are sustained by a stash of savings.
Despite high prices and rising interest rates, there were still signs of continued demand, although some categories pointed to a slowdown, including appliances, which fell and cars, where orders were up but much less than in recent months, as were computers and electronics .
Pantheon Macroeconomics’ Ian Shepherdson said the data showed orders were “sticking” despite business surveys pointing to weaker investment plans.
And as auto orders fall, “they’re trending sharply up as chip supply improves,” he said in an analysis.
“People report in surveys that they are unhappy and worried about the state of the economy, but they keep spending anyway because the huge pile of pandemic savings allows them to cushion the impact of high inflation on their real incomes.”
The decline in military aircraft orders was offset by a 14.5 percent increase in non-defense aircraft, the report said.
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