US durable goods orders saw dramatically slower growth in August after surging the month prior, the Commerce Department said on Friday, but the data showed an ongoing recovery.
August's 0.4 percent jump in orders to $232.8 billion was below estimates and a reversal from July's upwardly revised 11.7 percent growth.
Nonetheless, the data indicated a fourth consecutive month of growth after durable goods had plunged in March and April as the US economy shut down to stop the spread of Covid-19.
The Commerce Department said the gains were led by machinery's 1.5 percent rise to $31.2 billion.
July's surge had been led by new orders for transportation equipment, but they posted more modest growth of 0.5 percent in August with motor vehicles and parts orders falling 4.0 percent and defense aircraft and parts falling 6.4 percent after surging 75.3 percent month-on-month in July.
Excluding transportation, orders were overall up 0.4 percent, also below expectations, while excluding defense, orders rose 0.7 percent.
Ian Shepherdson of Pantheon Macroeconomics said the 1.8 percent growth in new orders for non-defense goods excluding aircraft indicated underlying strength in the report despite the disappointing overall growth.
"The rate of rebound has slowed -- orders rose 2.5 percent in July and 4.3 percent in June -- but the monthly total has now risen above the pre-Covid level, thanks mostly to strength in tech and 'other' durable goods," Shepherdson said, adding the data indicated "the Covid hit was nothing like as bad as the crash of 2008."
However Oren Klachkin of Oxford Economics warned the data foreshadowed future weakness in the sector's recovery as manufacturers struggle with the continued risk of Covid-19 and Congress remains deadlocked on more stimulus spending for consumers and business in the United States.
"Looking ahead, sluggish domestic and external demand, supply chain disruptions, lingering uncertainty, subdued profitability and low oil prices will constrain capital expenditure growth to only a modest pace," he said in an analysis.