Durable goods orders jumped 4% in July, according to the Commerce Department. Demand for autos and airplanes surged, more than erasing June's 1.3% drop and doubling economists' expectations.


The report offered a ray of hope amid poor numbers in growth and unemployment recently.

However, non-defense capital goods orders excluding aircraft, a closely watched indicator for business spending, fell 1.5% after rising 0.6% the month before.

Durable goods orders last month were boosted by a 14.6% jump in bookings for transportation equipment, which was the largest increase since January. That reflected a 43.4% surge in aircraft orders and an 11.5% spike in motor vehicle bookings.

Economists expect motor vehicle production to support growth in both the third and fourth quarters, and help the economy avoid another recession. Excluding transportation, orders rose 0.7% after gaining 0.6% in June.

But despite the durable goods numbers, the Institute for Supply Management's index of national manufacturing activity stood at 50.9 in July. Economists said it would likely fall below 50 in August, indicating contraction. The index has been steadily declining since March.