The modest pace of the U.S. economic recovery has a silver lining, as the expansion shows signs of lasting almost twice as long as average.WASHINGTON – Businesses placed fewer orders for most long-lasting manufactured goods in June, suggesting many are losing confidence in the slumping U.S. economy.
The housing recovery also lost some momentum last month as fewer Americans signed contracts to buy homes. A third report Thursday showed applications for unemployment benefits plunged last week – normally a good sign. But economists quickly dismissed the decline, saying fewer temporary auto layoffs distorted the figure.
The latest data added to worries that growth in the April-June quarter could be sharply lower than at the start of the year. The government will issue its first of three estimates for second-quarter growth today.
“It looks like the corporate sector is starting to lose confidence in the economy,” said Ethan Harris, co-director of global economics at Bank of America Merrill Lynch.
The most alarming sign Thursday was a report from the Commerce Department on business orders for durable goods, items expected to last at least three years.
While overall orders rose 1.6 percent in June from May, the increase was driven mostly by a surge in volatile aircraft orders.
When excluding aircraft and other transportation equipment, orders fell 1.1 percent – the third decline in four months. And orders for core capital goods, which indicate business investment plans, dropped 1.4 percent, also the third decline in four months.
Businesses placed fewer orders for industrial machinery, computers, and autos in June.
Manufacturing has slowed in recent months, along with the broader economy.
The report on durable goods “is just another number confirming how weak the second quarter was,” Harris said.
