Durable goods orders plunge as aircraft demand returns to normal

Orders for computers, automobiles and other long-lasting durable goods last month posted their biggest drop since the federal government began collecting the data in 1992 as aircraft demand returned to normal levels after a surge in July.

New orders for durable goods plunged 18.2% in August after increasing 22.5% the previous month, the Commerce Department said Thursday.

The figures are a closely watched indicator of economic activity in the important manufacturing sector.

In a positive sign, there was an increase in a key category viewed as a barometer for business investment plans.

The July jump had been fueled by a stellar month for Boeing Co., which said it received 324 new orders for jetliners. The figure was nearly triple the 109 orders the company had in June.

Dubai-based Emirates airlines boosted Boeing’s numbers in July, placing what has been called the largest single aviation order ever, for 150 of the comopany’s new 777X jetliners.

Boeing reported 107 new orders in August. The drop led to a 74.3% decline in overall orders for non-defense aircraft and parts last month, the Commerce Department said.

Boeing has averaged 123 new orders a month this year.

Analysts had been expecting a big drop in durable goods orders last month after Boeing’s outsized July performance. The plunge was slightly worse than the 17.1% decline economists had forecast.

Durable goods orders had risen for two straight months before August, and five of the previous six.

Lindsey Piegza, chief economist at Sterne Agee, said the August decline largely offset July’s gains.

“Excluding transportation, however, orders growth appears to be slightly stronger than expected in August, an encouraging sign that businesses may be slightly more confident as we head further into the third quarter,” she said.

Orders for aircraft and other transportation equipment can be volatile. Taking out those, new orders rose 0.7% in August after dropping 0.5% the previous month.

New orders for computers and related products dropped 8.4% in August after a 7.7% decline the previous month. Motor vehicle and parts orders were down 6.4% last month after increasing 10% in July.

Orders for non-defense capital goods, excluding aircraft, rose 0.6% last month after falling 0.2% in July. Economists say the figure is a key indicator of business investment.

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