Orders from U.S. and foreign businesses for capital equipment rose for the fourth straight month in July, the Commerce Department reported Wednesday.
Factory orders increased 1.3% in July, slower than the 2.0% growth that economists surveyed by MarketWatch had been looking for.
Economists believe that the nation's manufacturing sector may finally have turned the corner. On Tuesday, the Institute for Supply Management reported growth in the group's manufacturing index for the first time in 19 months. See full story.
Orders for durable goods increased 5.1% in July, revised down from 4.9% estimated a week ago. Orders for nondurable goods fell 1.9%, the government's data showed.
Meanwhile, shipments of factory goods were barely negative in July, and have fallen in 11 of the past 12 months. Shipments are down 19.9% in the past year.
Inventories fell 0.7% in July, marking an 11th straight monthly decline. Analysts believe the behavior of inventories over the next few months will say a lot about the economy's ability to recover from the worst recession in 70 years.
The news release from the Census notes the new orders have increased 5 of the last 6 months.
The Census release also contained this piece of information:
Inventories of manufactured durable goods in July, down seven consecutive months, decreased $2.9 billion or 0.9 percent to $313.7 billion, revised from the previously published 0.8 percent decrease. This followed a 1.5 percent June decrease.
Inventories of manufactured nondurable goods, down eleven consecutive months, decreased $0.7 billion or 0.4 percent to $189.4 billion. This followed a 0.4 percent June decrease. Plastic and rubber products led the decrease, down $0.4 billion or 2.0 percent to $18.9 billion.
The economy has seen a tremendous inventory drop over this recession. Consider this chart from the St. Louis Federal Reserve:
Click for a larger image.
At some time, those inventories will have to get re-stocked.
