EmailDurable goods orders jumped 4.2% in July, up from an upwardly revised 1.6% (from 1.3%) increase in June. The Briefing.com consensus expected durable goods orders to increase 2.5%. The entire gain in durable orders came from the transportation sector. Motor vehicle orders increased 12.8% in July while nondefense aircraft orders rose 53.9%. Both of these gains were expected given the recent order reports from Boeing (BA) and news of motor vehicle manufacturers keeping factories open during the normal retooling process. Excluding transportation, new orders fell 0.4% in July after falling a negatively revised 2.2% (from -1.4%). The Briefing.com consensus expected these orders to increase 0.6%.
The regional manufacturing surveys foreshadowed a possible fall in these orders. With the exception of the Chicago PMI -- which is heavily influenced by the motor vehicle sector -- all of the regional surveys showed a contraction in new orders in July. The pullback in business investment demand accelerated in July. Orders of nondefense capital goods excluding aircraft fell 3.4% after declining 2.7% in June. Shipments, which factor directly into third quarter GDP, were flat as manufacturers offset the decline in new orders by working off the stock of unfilled orders. There are not enough unfilled orders to keep shipments from contracting if new orders fail to rebound in the next month or two.
