Factory Orders Shoot Up Robust 2.2% During July

New orders for manufactured goods rose by a robust $4.2 billion, or 2.2%, to $196 billion in July, the Commerce Department said today.

In a separate report, the department announced that construction spending rose a healthy 0.5% in July, the best since April.

The monthly gain for manufactured goods was last equaled in December, 1985--when orders reached a record high of $201.2 billion--and was last surpassed by a 4.4% increase in November, 1984, department analysts said.

The increase was concentrated in durable goods, products with an average life of at least three years. Durable goods orders rose 4.1% to $106.9 in July.

Excluding the volatile defense capital goods sector, which increased $3.2 billion in July, durable goods orders rose just 1%, while manufacturing orders gained a scant 0.5% during the month.

The largest increase overall was in new orders for transportation equipment, which rose 21.9% to $28.7 billion. More than 80% of the increase was attributable to orders for aircraft and parts, analysts said.

Today’s report on construction outlays said spending rose at a seasonally adjusted annual rate of $376.7 billion in July.

That increase followed identical 0.1% gains in June and May and a 1.7% surge in April.

For the first seven months of the year, spending on construction activity was running 6.7% ahead of the pace during the same period in 1985. Construction activity has been one of the strongest segments of a generally sluggish economy.

The strength in July was led by a 1.6% jump in spending on government construction projects, which erased a 1.7% decline in June.

Private-sector housing activity was up 0.9% to a seasonally adjusted annual rate of $175.8 billion after a 1% June increase.

Construction of single-family units rose 2.3%, but construction of multifamily projects fell by 0.6%.

The strength came from a 5.1% jump in spending on hotels and motels and a 4.6% rise in industrial projects.