CSBJ Daily

The Associated Press

WASHINGTON – Orders to U.S. factories rose by a larger-than-expected amount during July as demand for commercial aircraft, heavy machinery and iron and steel all posted solid gains.

The Commerce Department reported today that new orders increased by 1.3 percent in July, much stronger than the 0.8 percent increase economists had been expecting. The July advance follows an even bigger 2.1 percent increase in June and represents the fifth straight rise in orders.

Manufacturers have seen a sharp slowdown in the U.S. economy offset by strong gains in foreign demand, helped by a weaker dollar which makes their products more competitive overseas.

Wall Street was generally unimpressed with the report on factory orders. Stocks declined in afternoon trading, marking the third straight session that stocks have fallen.

Private economists said the unexpectedly big increase in July factory orders came from strong demand for American exports. It was also helped by companies that increased their spending on equipment to take advantage of business tax breaks in the economic stimulus bill Congress passed last February.

Analysts said there was a danger that the economy could sag at the beginning of next year, however, as the business tax breaks come to an end and exports slow due to weaker growth in key overseas markets in Europe and Japan.