Durable Goods Orders: Unchanged in August as July Gains Are Revised Lower

Bottom Line: Durable goods orders were unchanged in August as the strong July report was revised modestly lower. Although they have fallen at a 3.3% annualized rate in the last three months, this reflects sharp swings in aircraft orders, evidenced by 22 Boeing orders in this report compared to 73 in July. Looking at the past 12 months, hardgood orders have declined at a 1.3% annualized rate. The July and August average of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is modestly below its Q2 level, suggesting that capital spending will have a negative Q3 impact on GDP growth. Durable Goods Orders were UNCHANGED in August, compared with market expectations for a decline of 1.5%. Moreover, the prior month was revised lower from 4.4%to 3.6%. Transportation Orders ROSE by 0.6% with civilian aircraft orders dropping by 21.9% while motor vehicle orders climbed by 0.7%. Ex-transportation orders FELL by 0.4%. Primary metals and other durable goods categories increased while electrical equipment and machinery declined. Core Durable Goods Orders, those excluding both civilian aircraft and defense, ROSE by 0.2% and are 0.3% BELOW their year ago level. Nondefense Capital Goods Shipments FELL. Including civilian aircraft, they FELL by 1.9% and excluding them they FELL by 0.4% Durable manufacturing inventories ROSE by 0.1%. The July and August average of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is modestly below its Q2 level, suggesting that capital spending will have a negative Q3 impact on GDP growth.