Implications:  New orders for durable goods continued to climb higher in August, though at a slower pace than the consensus expected as the growth of orders cooled from the fastest 3-month pace in series history dating back to the early 1990's.  With a combined 39.0% increase since the April bottom, new orders now sit just 5.4% below the February pre-pandemic high, signaling a sharp recovery in the manufacturing sector.  The volatile transportation sector lived up to its name once again, with a sizeable rise in orders for commercial aircraft being largely offset by a drop in orders for motor vehicles.  Excluding transportation, orders rose 0.4% in August and have now broken above the levels seen to start the year.  Among the core non-transportation categories, orders activity was mixed in August, with machinery (+1.5%), computers & electronic products (+1.2%), and primary metals (+1.2%) rising while electrical equipment (-1.5%) and fabricated metal products (-1.3%) declined.  One of the most important pieces of data from today's report, shipments of "core" non-defense capital goods ex-aircraft (a key input for business investment in the calculation of GDP growth), rose 1.5% in August.  Even if these orders remain unchanged in September, this measure will be up at a 30.8% annualized rate in Q3 versus the Q2 average, suggesting that business investment, which was a major drag on real GDP in the second quarter, will be a major tailwind in Q3.  While this represents growth from a very low base, Q3 is on track to see real GDP growth in the 25 - 30% range.  The Atlanta Fed's "GDP Now" model had Q3 growth at a 32.0% annual rate going into today's report, but we are sticking with a slightly more conservative forecast as inventories may remain a source of weakness.  We also expect the economy will continue to grow at an above-trend pace in Q4 and through 2021, but the road to recovery will be a long slog back.  What matters most, is that we have started our way down the path.

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