 | New orders for durable goods declined 1.0% in June |
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Implications: Overall orders declined 1% in June but the details of the report show capital spending is stronger than the headline suggests. Orders for civilian aircraft, which are extremely volatile from month to month, fell 25.6%. Excluding that single category, orders were essentially unchanged for the month, with increases in orders for motor vehicles/parts, fabricated metals, and electronic equipment/appliances roughly offsetting declines in orders for primary metals, machinery, and computers/electronics. Notably, all of the declining categories in June are ones where orders are still up substantially in the past year, with primary metals up 40%, machinery up 19%, and computers/electronics up 11%. Meanwhile, shipments of "core" capital goods, which exclude defense and aircraft, increased 0.2% in June, the ninth increase in the last ten months. This is the number the government uses to estimate business investment in equipment. Gains in these shipments should continue; new orders for core capital goods increased 0.6% in June and unfilled orders increased 1.1%. In other recent news, the Richmond Fed index, a measure of manufacturing in the mid-Atlantic, came in at +16 in July. That's a decline versus +23 in June but was higher than the consensus anticipated and suggests continued healthy growth in the factory sector. The Case-Shiller index, a measure of home prices in the 20 largest metro areas, increased 0.5% in May and is up 4.6% in the past year.
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