WASHINGTON, Aug 25 (AFP) - Roaring demand for civilian planes added thrust to the US manufacturing sector in July, government figures showed Wednesday, an encouraging sign for factories.
Orders for durable goods -- items expected to last at least three years -- rose a seasonally adjusted 1.7 percent in July from the previous month, the Commerce Department said.
They had gained 1.1 percent in June.
The result, boosted by a doubling in orders for non-military aircraft, comfortably beat many economists' forecasts for a 1.0 percent rise in July orders.
Stripping out transportation, the durable goods orders edged up a modest 0.1 percent.
"While much of the strength in this morning's durable goods release was propelled by a 100 percent gain in new orders for civilian aircraft, the report nonetheless offers further evidence that the manufacturing recovery remains on track," said Manufacturers Alliance/MAPI economist Clifford Waldman.
"Business investment growth is steady and a strong increase in new orders for machinery and primary metals indicates that the industrial recovery continues to have momentum in spite of economic concerns such as high oil prices, weak job growth outside of manufacturing, uneven global growth and geopolitical concerns," Waldman said.
A breakdown showed:
-- Transportation orders jumped 5.6 percent, including a 100.4 percent advance in commercial plane orders, a 38.4 percent dive in warplanes and a 5.3 percent reversal in motor vehicles.
-- Computers and electronic products orders fell 3.8 percent.
-- Machinery orders rose 2.1 percent.
-- Primary metals orders surged 5.8 percent.
-- Capital goods orders jumped 5.7 percent, including a 9.0 percent advance in non-military capital goods and a 16.2 percent slump in defense capital goods.
-- A barometer of business investment plans -- non-military capital goods orders excluding aircraft -- rose 0.6 percent.
Over the year to July, orders were up 12.8 percent, said Wachovia chief economist John Silvia.
It is a "good signal for capital spending and continued economic growth," Silvia said.
Shipments of durable goods climbed 0.1 percent in July, after a 1.1 percent increase in June, the Commerce Department said.
Unfilled orders, which have gained in 11 of the past 12 months, rose 1.2 percent.
Prospects were uncertain, however, said a report by Merrill Lynch chief North American economist David Rosenberg and senior economist Kathy Bostjancic.
"The outlook for fourth quarter demand and beyond looks a bit cloudier as orders are softening and inventories are rising faster than expected," they said.
For the third straight month, durable goods inventories had climbed 0.8 percent, with gains across the board, they said.
"We have been looking for a bounce in capex (capital expenditure) in the fourth quarter ahead of the expiry of the corporate tax credit at year-end. But the rising inventories and softening orders demand signals that the fourth quarter rise could be weaker than forecast."