U.S. Factory Orders Rose More Than Forecast on Fuel

Factory orders in the U.S. increased more than forecast in June, propelled by petroleum and chemicals gains reflecting soaring prices. The 1.7% gain in bookings, the biggest this year, followed May's revised 0.9% rise that was larger than previously estimated, the Dept. said. The jump in raw-material costs is hurting profits, causing businesses to limit spending on new equipment. Overseas demand is helping factories withstand the slowdowns in corporate and consumer spending, giving the economy a lift as effects of the tax rebates wane. Economists forecast factory orders for June would rise 0.7% after a previously reported 0.6% gain for May, according to the median of 56 forecasts in a Bloomberg News survey. Estimates ranged from a 0.2% drop to a 2% rise. The biggest increase in prices in almost three years eroded consumers' buying power in June, diminishing the boost from the government's tax rebates, a separate report from Commerce also showed. Consumer inflation rose 0.8%, the most since Sept. 2005, the Commerce Dept. said today. Spending increased 0.6% after a 0.8% gain in May.