Business investment is showing signs of recovery

Orders for long-lasting goods such as cars and computers bounced back sharply in July after two months of declines.

Durable goods orders jumped 4.4% to $228.9 billion, the Commerce Department said Thursday, topping economists' forecast of a 3.7% rise.

A proxy for business investment – capital goods orders excluding volatile aircraft and defense – advanced a healthy 1.6%, signaling that such capital spending may be poised for a rebound after a long slump.

"The details of the report provide tentative evidence that business equipment investment may be set for a gradual recovery," said Andrew Hunter, U.S. economist at Capital Economics, in a report.

Companies buying transportation equipment stoked the overall growth as their orders increased 10.5%, including a 90% surge in commercial aircraft orders. Excluding transportation, new orders still increased 1.5%.

Demand for computers and related products were among the bright spots, rising 10.3%. By contrast, communications equipment orders declined 1%.