U.S. June Durable Goods Orders - Restrained by seasonal adjustments and possibly prices
June durable goods orders with a 0.3% rise were well below expectations with a bounce in aircraft orders implied by Boeing data failing to show up in seasonally adjusted data while the ex transport gain of 0.6% was the slowest since January, though this may in part reflect easing price pressures.
Transport orders fell by 0.2% with nondefense aircraft up by a moderate 3.7% seasonally adjusted but up by 48.8% before seasonal adjustment. Autos saw a 0.6% decline after a 1.1% increase in May. Defense was not a major factor with orders ex defense also up by 0.3% in line with the overall data.
The ex transport gain of 0.6% follows four straight gains of over 1.0% but the net gain can be seen as 1.0% with May revised to to a 1.8% increase, the strongest of the four recent gains, from 1.4%. Some of the recent strength may be on prices and price pressures eased in June. The slowing follows a slower preliminary S and P manufacturing PMI release on Friday, though that release was for July.
Non-defense capital orders ex aircraft, a key indicator for business investment, also saw some slowing, but remain quite firm with a rise of 0.9%. Shipments in the sector rose by 1.9% which is supportive for Q2 GDP. Inventories rose by 0.3%, stronger than May’s 0.1% but matching gains seen in March and April. This is unlikely to change GDP forecasts much.
