Orders for durable goods jumped a surprising 1.3 percent in June, the Commerce Department said Wednesday.
As a year-long expansion in manufacturing carried briskly into the second half, the increase in durables orders to a seasonally adjusted $151 billion bolsters the impression that some sectors of the economy might be nearing capacity constraints.
It also heightened the prospects that the Federal Reserve might notch up interest rates again to restrain the possibility of inflation.
“This increases the possibility, the probability of the Fed tightening in the near future,” said economist Sung Won Sohn, of Norwest Corp., in Minneapolis. “We’re going to see more and more bottlenecks emerge and then price increases.”
June was the fourth straight month in which orders increased for durables, such goods as cars and refrigerators that are intended to last three years or more.
It followed a revised rise of 1.2 percent in May. Demand for durables has grown in 10 of the last 11 months.
Analysts noted manufacturing activity was rising despite four hikes in interest rates by the Fed this year. Evidence of brisk momentum in the economy may hasten the next rate increase.
“What this kind of growth says is that they (the Fed) need to take additional steps to head off inflation,” said Richard Berner, an economist with Mellon Bank.
