A gauge of planned spending by US businesses fell in July for a second straight month, suggesting a slowing growth trend in the factory sector, even though demand for long lasting manufactured goods surged.

The Commerce Department said today non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, declined 3.4 per cent after falling 2.7 per cent in June.

Economists polled by Reuters had expected a 0.7 per cent rise after a previously reported 1.7 per cent decline in June.

This category tends to weaken at the start of a quarter, but it was the second straight month of weakness, hinting at a cooler growth pace in manufacturing, a sector that has shouldered the economy's recovery from the 2007-09 recession.

It could favour additional monetary easing by the Federal Reserve next month, even though other data on jobs, consumer spending and the housing sector suggested an improvement in the economy early in the third quarter after growth slowed in the April-June period.

Reuters