Hot sectors in a tepid recovery
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UPDATE 2-U.S. June durable goods orders rise unexpectedly
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WASHINGTON, July 25 Reuters) - New orders for long-lasting U.S. manufactured goods rose unexpectedly in June on a surge in defense orders while a gauge of business investment was also higher than forecast in signs of economic resilience, a government report showed on Friday.
U.S. stock futures and the dollar rose on the stronger-than-expected report. Treasury debt prices extended losses and market expectations rose for the Federal Reserve to increase interest rates in September to combat inflationary pressures.
Durable goods orders were up 0.8 percent, after a revised 0.1 percent gain in May. When volatile transportation orders were excluded, orders climbed 2 percent last month, the sharpest rise since December. Orders for defense jumped 10.7 percent.
Non-defense capital goods excluding aircraft, viewed as a barometer of business spending, jumped 1.4 percent after a revised 0.1 percent decline in May.
"The overall pattern of business investment in the U.S. is holding up pretty well," said Shaun Osborne, chief currency strategist at TD Securities in Toronto.
"The underlying trend is ... not indicative of the levels that you would normally associate with a recession in the U.S."
Orders for metals, machinery, and electrical equipment all rose, the Commerce Department said.
Markets were awaiting reports later in the morning on consumer sentiment and new home sales.
A real estate industry report on Thursday showed that home resales had fallen to the lowest pace since early 1998, suggesting it will take quite some time for hard-hit housing markets to return to normal. (Reporting by Mark Felsenthal, Editing by Neil Stempleman)
