Factory Orders Surged 5.5% in June

Orders for goods manufactured in the U.S. surged for the second straight month in June, in yet another indication that portions of the economy remained strong in the second quarter even as Federal Reserve policymakers tipped their hats to "preliminary" signs of an economic slowdown.

Factory orders rose 5.5% in June -- the fastest pace in about nine years -- to a seasonally adjusted $409.2 billion, following a 4.7% rise in May, the Commerce Department reported Thursday. A rise in orders had been expected by economists, though the actual number was higher in magnitude than the 4.7% consensus forecast by Reuters.

The data could cast further doubt on the degree to which the economy slowed in the second quarter, and whether Fed policymakers might continue to raise interest rates when they meet on Aug. 22.

At the Fed's meeting in June, central bankers left rates unchanged, citing slower activity in some portions of the economy such as the housing market and orders for big-ticket manufactured goods.

But further data has shown that the economy grew at a solid 5.2% annual rate overall in the in the second quarter. Key market sectors such as retail sales and orders for durable goods have all recently showed renewed signs of strength, suggesting that the Fed might resume its campaign of interest rate hikes in an attempt to quell business and consumer demand to slow growth to prevent inflation.

Orders for durable goods -- big-ticket items meant to last for three or more years -- showed the sharpest gain in June, rising 9.7%, helped by orders for aircraft and other transportation equipment. Transportation equipment orders alone jumped 42.2% in June after rising 6.8% in May.

Non-durable goods, which includes food, petroleum, paper and other short-lived goods, fell a slight 0.1% following a 1.6% rise in May.

Excluding defense-related goods, orders grew 2% in June after rising 4.3% in May.

Orders for electronic and electrical goods, which include communications equipment, computers, appliances and electrical components, posted a 0.2% decline after jumping 28.4% in May.