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 Another report on Wednesday from the Federal Reserve showed
manufacturing expanding across a broad base of sectors and auto
sales hitting "high levels" in recent weeks.
"U.S. economic activity continues to improve," said Jennifer Lee, a
senior economist at BMO Capital Markets in Toronto.
The Commerce Department said new orders for manufactured goods
jumped 10.5 percent in July on robust demand for aircraft and autos,
compared to a 1.5 percent rise in June.
Orders excluding the volatile transportation category slipped 0.8
percent in July, but that drop followed a 1.4 percent increase the
prior month, leaving intact the upbeat trend for manufacturing
activity.
Separately, industry research firm Autodata Corp said auto sales
rose to a seasonally adjusted annual rate of 17.53 million units in
August, the highest level since January 2006 and above Wall Street's
expectations of a 16.6 million-unit pace.
Ford Motor Co saw a 0.4 percent increase in sales, while Chrysler
Group - a unit of Fiat SpA - reported a 20 percent surge. General
Motors Co, however, said its sales declined 1.2 percent.
Manufacturing is accelerating, with the Institute for Supply
Management reporting on Tuesday that its gauge of factory activity
hit its highest level in nearly 3-1/2 years in August. In addition,
a measure of new orders touched a 10-year high.
The factory and auto sales reports added to employment and housing
data in painting an upbeat picture of the economy.
BUSINESS SPENDING RISING
Economists say the acceleration in factory activity suggested a
pickup in business spending on capital goods and supported their
forecasts for sturdy growth in the third quarter.
Growth estimates for the July-September period range as high as a
3.5 percent annual pace. The economy expanded at a 4.2 percent rate
in the second quarter.
Separately, the Fed's Beige Book found economic activity continued
to expand in recent weeks. It said manufacturing was growing
broadly, with auto production boosting demand for steel and other
related products.
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"It reinforces the current narrative of improving domestic economic
fundamentals," said Millan Mulraine, deputy chief economist at TD
Securities in New York.
U.S. financial markets were largely unmoved by the data as investors
focused on the conflict in eastern Ukraine. U.S. stocks ended mixed,
with Apple shares falling 4.22 percent as it grappled with a
possible security breach of its iCloud service a week before the
launch of its new iPhone.
Orders for transportation equipment soared a record 74.1 percent in
July, reflecting outsized civilian aircraft orders received by
Boeing <BA.N> that was flagged in the durable goods orders report
published last week.
Auto orders rose 7.3 percent, the largest increase since March 2011,
and capital goods orders surged a record 52.5 percent. But orders
for primary metals, machinery, computers and electrical equipment,
appliances and components fell.
Unfilled orders at factories recorded their largest rise in 14
years, while inventories remained lean, both positive signs for the
sector in the near term.
(Reporting by Lucia Mutikani; Additional reporting by Bernie Woodall
and Ben Klayman in Detroit and Michael Flaherty in Washington;
Editing by Paul Simao)
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