Durable goods orders jumped 4 percent, the Commerce Department said as demand for autos and airplanes surged, more than erasing June’s 1.3 percent drop.
The rise was double economists’ expectations.
But non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.5 percent after rising 0.6 percent.
Economists noted this so-called core capital goods category tends to be weak in the first month of a quarter and were encouraged that shipments of these goods, which go into the calculation of gross domestic product, had risen.
Since July, however, stock prices have dropped sharply and consumer confidence has taken a hit, suggesting the report on durable goods — items from toasters to aircraft meant to last three years or more — could be offering a rosier view of the economy than currently warranted.
In Germany, business confidence posted its steepest drop this month since the aftermath of the Lehman Brothers collapse in late 2008, raising fresh doubts about the broader European economy as it grapples with a crippling debt crisis.
Similar concerns hold in the US.
“There is legitimate fear that businesses will shelve expansion plans and signs of such behavior are evident in the August business surveys,” said Aaron Smith a senior economist at Moody’s Analytics in West Chester Pennsylvania.
“While falling stock prices and diminished confidence are affecting business decisions, we are not at recession-like levels, which is good.”
US stocks rallied on the durable goods data, while prices for Treasury debt fell.
The dollar was marginally weaker against a basket of currencies.
Federal Reserve Chairman Ben Bernanke is expected to use a speech at an annual central bank conference in Jackson Hole, Wyoming, on Friday to acknowledge his disappointment over the pace of economic growth, even downgrade his outlook.
He is also expected to explain which Fed actions are best suited to fortify the economy, but he is unlikely to reach for shock treatment.
Regional manufacturing surveys so far for August have been sharply weak, raising the risk overall manufacturing may have stalled this month.
The Institute for Supply Management’s index of national manufacturing activity stood at 50.9 in July and economists said it would likely fall below 50 in August, which would indicate a contraction.
The index has been steadily declining since March, but that weakness had been blamed mainly on supply chain disruptions from Japan. The August survey will be published on Sept. 1.
Durable goods orders last month were buoyed by a 14.6 percent jump in bookings for transportation equipment, which was the largest increase since January.
That reflected a 43.4 percent surge in aircraft orders and an 11.5 percent spike in motor vehicle booking.
The increase in auto orders was the largest since January 2003 and indicated the disruptions wrought by the Japan earthquake was fading.
Boeing received 115 aircraft orders, 100 of those from American Airlines, according to information posted on the plane maker’s website.
That was up from 48 in June.
Excluding transportation, orders rose 0.7 percent after gaining 0.6 percent in June.
“This report offers some encouragement that overall manufacturing production may not have fallen entirely out of bed,” said Millan Mulraine, a senior macro strategist at TD Securities in New York.
Manufacturing has been a key pillar of the US economy’s recovery and an erosion of that support would be particularly bad given that housing, which has shouldered previous recoveries continues to struggle.
Demand for loans to purchase homes slumped to a nearly 15-year low last week, blamed largely on the stock market turmoil.
A separate report from the Federal Housing Finance Agency showed home prices rose 0.9 percent in June from May.
However, they were down 4.3 percent from a year ago, and other reports have shown prices slipped in July.
Luxury homebuilder Toll Brothers reported tepid growth in orders in the third quarter and a rise in cancelations.
It said stock market volatility and economic uncertainty continued to weigh on home-buyer confidence.
