U.S. July Durable Goods Orders - Some loss of momentum in Q3 to date
August durable goods orders are unchanged, a little stronger than expected overall, but the ex transport gain of 0.3% is weaker than expected and even with July revised up to 0.7% from 0.4% Q3 data to data has been slower than Q2’s.
The hints of slowing in Q3 follow a decline in August manufacturing output in the industrial production report. However, the very strong manufacturing survey from the S and P PMI cautions against reading too much into the loss of momentum in July and August (though it could also be argued that markets over-reacted to the S and P data).
Non-defense capital orders ex aircraft saw a strong 1.6% increase which suggests conrt9nued momentum in business investment. Shipments in the sector rose by 0.6%, which will not change positive expectations for Q3 GDP very much. A 0.5% rise in inventories maintains a stronger picture in Q3.
Transport orders fell by 0.6% with civil aircraft and autos seeing modest declines. Defense aircraft saw a rise though defense capital was softer. Orders ex defense rise by 0.1%.
