NEW orders for key U.S.-made capital goods increased by the most in nearly two years in June and shipments accelerated, but the gains were likely insufficient to avert the deepest plunge in business investment and economic activity since the Great Depression in the second quarter because of the COVID-19 crisis. The improvement in manufacturing reported by the U.S. Commerce Department on Monday was driven by pentup demand following the reopening of businesses. The budding recovery is threatened by a resurgence in new cases of the coronavirus, which has forced some authorities in the hard-hit southern and westerm regions to either close businesses again or halt reopenings. “The sugar rush from re-openings has now faded and a resurgence of domestic coronavirus cases, alongside very weak demand, supply chain disruptions, historically low oil prices, and high levels of uncertainty will weigh heavily on business investment,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 3.3 percent last month, the U.S. Commerce Department said. That was the biggest increase in these so-called core capital goods orders since July 2018 and followed a 1.6 percent rise in May. Core capital goods orders remained 3.2 percent below their pre-pandemic level. Orders last month were boosted by demand for machinery, fabricated metals and primary metals. Orders for electrical equipment, appliances and components increased 1.2 percent, likely driven by workers setting up home offices. Economists polled previously had forecast core capital goods orders advancing 2.3 percent in June. Core capital goods orders fell 2.3 percent on a year-on-year basis in June. Shipments of core capital goods surged 3.4 percent last month, the biggest gain since November 2013. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement. They rose 1.6 percent in May and remain 3 percent below their the February level. The U.S. Government will publish its snapshot of second-quarter GDP on Thursday. (SD-Agencies) | 