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Factory Orders: Rebound in July

September 2, 2016
Bottom Line: Factory orders increased moderately in July, rebounding from two months of declines, largely due to a climb in aircraft orders within durable goods orders, as previously reported. However, the growth rate has been declining over the past 17 months and is now -3.5% year-over-yea. And with only a month in the books, this would suggest equipment spending was a modest drag on 3Q-16 GDP to start the quarter.

Factory Orders ROSE by 1.9% in July, compared with market expectations for an increase of 2.0%. The prior month's loss was revised lower from -1.5% to -1.8%.

Durable goods orders climbed by 4.4%, as previously reported, while nondurable goods orders slipped by 0.5%. Excluding orders for defense goods, civilian aircraft and petroleum products, (so called) core factory orders ROSE by 0.5%.

Factory orders are now 3.5% BELOW their year ago level and the year-over-year growth rate has rose moderately over the past year (from -14.0% a year ago to the current -3.5%).

The July level is modestly below its Q2 average, after a slight decline in equipment spending in the Q2 GDP report.
Article by contingentmacro