Durable Goods Orders Decline 1.5% During July

Orders for big ticket durable goods declined by a modest 1.5% in July as auto makers cut production in response to swollen inventories, the government said Tuesday.

The Commerce Department said orders for durable goods, products expected to last three or more years, dropped $1.7 billion last month to a seasonally adjusted $107.5 billion.

The dip followed a 2% increase in June and was the first decline since a sharp 9.8% drop in January.

The July decline was reflected in most subcategories, but economists pointed to signs of strength in a key barometer of business investment plans. Orders for non-defense capital goods, considered an indicator of future plant and equipment spending, rose 1.6% in July after a 0.4% drop in June.

“This is telling us that capital spending purchases should be picking up in the second half of the year,” said Michael K. Evans, head of an economic consulting firm in Washington. “Considering that the rest of the economy ain’t so hot, it’s welcome news.”