Orders to U.S. factories for big-ticket manufactured goods surged in July, rising 3.3 percent, with gains posted for everything from industrial machinery and electronics to transportation equipment.
The Commerce Department reported Wednesday that orders for durable goods - items expected to last at least three years - rose last month to a seasonally adjusted $204 billion.
The 3.3 percent increase was the biggest gain since December 1998, when durable-good orders rose 3.4 percent.
The increase followed a 0.5 percent gain in June, better than what the government previously had estimated, and a 1 percent gain in May.
July's performance was much better than many analysts had expected. They were forecasting that orders for manufactured goods would rise 0.8 percent in July.
The strong report comes one day after the Federal Reserve bumped up interest rates for the second time this year in an effort to cool the economy and prevent an outbreak of inflation.
Orders for industrial machinery, the category that includes computers and machine tools, had the strongest showing in July, rising a hefty 8.4 percent, the largest increase since January 1995. That followed sharp declines of 4.5 percent and 3.9 percent in May and June respectively.
And, orders for electronic and other electrical equipment, which includes everything from semiconductors, circuit boards and telecommunications equipment to home appliances, posted a strong 5.9 percent gain in July, following a 3.5 percent increase in June and a 0.9 percent drop in May. July's showing for this category was the biggest gain since December 1998, the department said.
Orders for transportation equipment also rose 2 percent in July, following gains of 1.1 percent in June and 9.9 percent in May. The transportation sector is often volatile from month to month because it includes such big-ticket purchases as airplanes.
The Commerce Department said that an increase in orders for airplane and aircraft parts more than offset a decline in orders for automobile and car parts. The summer is traditionally a slow period for the automobile industry as manufacturers retool assembly lines to prepare for new models. Still, the auto industry expects record sales this year.
Excluding transportation, overall orders for durable goods would have risen 3.7 percent, the largest increase since February 1997.
American manufacturers have been battered by a global financial crisis, which has cut sharply into their overseas sales and also opened them up to stiffer competition from cheaper imports.
Still, the overall economy has continued to do exceptionally well, powered by strong consumer demand.
One of the U.S. industries that has suffered the most from the global turmoil has been steel. But Wednesday's report indicated that the industry may have put the worst behind it.
Primary metals, the category that includes steel, saw orders grow by solid 2.4 percent in July, following gains of 2.7 percent in June and 0.3 percent in May.
And, shipments of big-ticket durable goods, a good sign of current demand, rose a solid 0.7 percent in July.