Excluding transportation, durable orders rose 2.9%. Defense orders plunged 33.3% after rising 117% in the previous two months. Nondefense capital goods orders, the key indicator for future investment, rose 1.9%, but shipments fell 0.1%.
Durable shipments rose 3.5% (1.5% excluding transportation), confirming strong second-quarter growth. Inventories fell for the 15th consecutive month, down 0.3%.
The data suggest that the manufacturing sector recovery is becoming established, even outside of defense, and should suggest to the Federal Reserve that interest rate hikes are becoming safe. Nevertheless, S&P expects the Fed to wait until September to move.