U.S. July Durable Goods Orders - Aircraft surge inflated by seasonal adjustments, underlying picture subdued
July durable goods orders surged by 9.9% but this was fully due to a surge in aircraft which appears to be exaggerated by seasonal adjustments. Ex-transport orders maintained a fairly flat picture, with a dip of 0.2%, weaker than expected net of a downward revision to June to a 0.1% increase from 0.4%.
Boeing data had shown a pick-up in aircraft orders from two weak months, but June weakness in the durables report was exaggerated by seasonal adjustments, with the June seasonally adjusted aircraft orders level being negative. Seasonally adjusted aircraft orders in July were in contrast stronger than the unadjusted data.
Aircraft were the main reason that July durable orders rose by 9.9% and the main reason June fell by 6.9%. A surge in transport orders came despite a weak month for autos though defense aircraft orders did see an increase. Ex-defense however the orders rise of 10.4% was even stronger than the headline.
A subdued picture ex transport is consistent with softer payroll manufacturing and ISM manufacturing data in July. Non-defense capital orders ex aircraft, a key indicator of business investment, were also subdued, falling by 0.1% in the case of orders and 0.4% in the case of shipments.
