Higher durable-goods orders ease economic worries

A surge in demand for autos and aircraft drove orders for long-lasting manufactured goods higher in July, easing fears that the economy might be on the verge of another recession. The rebound in the auto industry helped offset a decline in orders for most other factory goods. Stocks rose after the better-than-expected report showed the biggest increase in durable-goods orders since March, when the Japan earthquake disrupted supply chains and slowed auto production. The Dow Jones industrial average gained more than 50 points in morning trading. Broader indexes also increased. Overall orders for durable goods rose 4% last month, the Commerce Department says. The report “reinforces other data that the economy wasn’t at serious risk of recession through July,” says David Resler, chief U.S. economist at Nomura Securities. Retail sales and industrial production also held up well last month, he says. The data did offer a cautionary signal: a key category that tracks business investment plans fell 1.5%, the biggest drop in six months. That suggests businesses are pulling back on spending. Orders in all other major categories dropped, including computers, electronic goods, and machinery.