Orders for U.S.-manufactured durable goods (items meant to last at least three years) fell in July by $4.3 billion (-1.7 percent) to $246.9 billion, according to new data from the Census Bureau. That was more than double the decline economists anticipated and the June gain was revised lower. Most of the headline weakness was due to a sharp drop in aircraft orders, to be expected after Boeing announced a one-time spike in demand in the prior month.
“Core” durable goods orders, which exclude the volatile transportation component, lifted by 0.2 percent in July, much worse than forecast and the June gain was revised lower. Annual growth, though, remained positive for the 21st month in a row, and orders for nondefense capital goods excluding aircraft, i.e. core capital expenditures, an important proxy for U.S. business investment, increased by 1.4 percent in July. That was much better than expected and bodes well for U.S. gross domestic product (GDP) growth this quarter. Moreover, the latest projection from the Federal Reserve Bank of Atlanta suggests that the economy expanded by 4.6 percent in Q3 2018, which would be a welcome continuation of the strength seen in the second quarter.
Sources: Econoday, U.S. Census Bureau, FRBA, FRBSL
Post author: Charles Couch