Reuters reported that demand for long lasting US manufactured goods fell in June 2011 and economic activity across much of the nation slowed through mid July 2011, casting doubt over how quickly the economy might escape its soft patch.

The Federal Reserve said that the recovery lost steam in eight of 12 regions it tracks in recent weeks, with hiring modest, wages soft and price pressures subdued. It added that "Economic activity continued to grow; however, the pace has moderated in many districts."

Separately, the Commerce Department said that weak receipts for transportation equipment pushed down durable goods orders 2.1% in June 2011 after a 1.9% increase in May 2011. A closely watched reading on business spending plans also fell. Excluding transportation, orders edged up just 0.1%.

Mr Michelle Meyer, an economist at Bank of America Merrill Lynch, said that "We're getting confirmation that this is more than just a soft patch in the first part of the year, that it's a more fundamental slowdown triggered in part by the political environment and jittery markets."

Economists said the drop in the so called core category of factory orders that is used as a proxy for business spending plans was troubling and could yield slower growth in spending by businesses on equipment and software in the third quarter.

Mr Michael Feroli, an economist at JPMorgan in New York, said that "The June decline is somewhat worrisome regarding the vigor of the trend in capital spending. This is particularly so given that the June data probably predates any debt ceiling driven precaution on the part of business behavior."

The Fed report, based on comments by business contacts in the central bank's 12 districts, also presented a glum picture. While most districts saw modest hiring gains, labor markets remained soft, the Fed said. Home sales were little changed since the Beige Book issued in early June and most districts reporting on home prices found them flat or declining.

(Sourced from www.reuters.com)