July Durables Data Weak Even Looking Past Headline Plunge

Source: Economics Group of Wells Fargo Bank, N.A. Summary The 5.2% plunge in July durable goods orders reflects a reversal in aircraft orders after a temporary surge a month earlier. Orders excluding transportation were much more stable. It’s early yet for quarterly growth, but the shipments data suggest a weak start to Q3 equipment investment. Ignore Headline Orders, Q3 Equipment Starts on A Weak Note New orders for durable goods reversed in July. We encourage you to look past the headline figures this month. After jumping 4.4% a month earlier, orders plunged 5.2% in July and reflect the reversal in volatile aircraft orders, which plunged 43.6% in July. These data are consistent with the previously released data from Boeing, which reported just 52 new orders for aircraft in July after a surge of 304 new orders in June. We expected the June jump to be temporary and likely somewhat reflected the Paris Air Show that took place that month. In excluding transportation, orders rose a more reasonable 0.5% and were fairly broad based notwithstanding some pullback in orders for computers. Orders for communication equipment rose 1.2%, which looks particularly strong after a 3.4% gain in June. There looks to be similar sustained orders activity in fabricated metal products, which rose 0.7% in July after a 1.0% gain in June. READ FULL ARTICLE >>