AHEAD OF THE BELL

Durable goods

[September 24, 2010]  WASHINGTON (AP) -- Orders to U.S. factories for durable goods likely took a tumble in August because of an expected sharp drop in demand for aircraft.

Economists surveyed by Thomson Reuters expect total orders for durable goods to have dropped 1 percent in August. Still, they believe that orders excluding transportation rose 1 percent. The Commerce Department will release the new report at 8:30 a.m. EDT Friday.

In July, orders for durable goods, items from heavy machine tools and airplanes to computers and kitchen appliances, edged up 0.3 percent. But all the strength came from a surge in demand for commercial jetliners.

Excluding transportation, durable goods fell 3.8 percent, reflecting widespread weakness in a number of areas.

For August, that situation is expected to reverse. Commercial airplane orders are expected to drop based on reports that orders to Boeing Co. slowed sharply. Economists are also expecting demand to fall for motor vehicles.

Analysts are looking for strength outside of transportation. A 1.1 percent gain in the durable goods categories outside of transportation would be the best increase since a 1.4 percent rise in May.

Manufacturing has helped drive economic growth since the recession ended in June 2009. American companies are benefiting from stronger growth in exports to China and other developing nations. Rising demand in those areas has helped to offset sluggish U.S. consumer demand.

However, manufacturing, like the rest of the U.S. economy, slowed in the late spring and early summer, raising concerns that the country could be threatened with another recession. While those worries have eased a bit in recent weeks, many economists are forecasting sluggish growth for the remainder of this year.

[Associated Press]

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