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Economy in Brief

U.S. Durable Goods Orders Beat Expectations, Led Higher by Civilian Capital Goods
by Tom Moeller  August 26, 2015

The factory sector is moving onto a firmer footing. New orders for durable goods increased 2.0% during July (-19.6% y/y) following a 4.1% June gain, revised up from 3.4%. The increase compared to expectations for a 0.5% decline in the Action Economics Forecast Survey. During the last ten years, there has been an 88% correlation between the y/y change in durable goods orders and the change in real GDP.

Last month's strength in orders was powered by a 2.2% rise (-2.3% y/y) in nondefense capital goods bookings outside of the aircraft sector. It followed a 1.4% increase, revised from 0.7%. Overall, nondefense capital goods orders rose 1.1% (-41.0% y/y) following a 10.6% jump. Orders for nondefense aircraft & parts declined 6.0% (-77.8% y/y) following a rise of more than two-thirds in June. Defense capital goods bookings rose by nearly one-quarter m/m and by one-third y/y.

Transportation sector orders increased 4.7% (-39.7% y/y) after a 10.7% gain. Orders excluding transportation increased edged 0.6% higher (-2.5% y/y). Motor vehicle orders increased 4.0% (5.2% y/y).

New orders for computers & electronic products increased 2.0% (7.5% y/y) after two months of more moderate increase. Machinery orders improved 1.5% (-5.1% y/y) and added to a 2.3% rise. Orders for electrical equipment, appliances & components improved 1.3% (-5.0% y/y) after a similar June gain.

Shipments of durable goods increased 1.0% (-0.1% y/y) after a 0.9% rise. Transportation equipment shipments gained 2.5% (3.8% y/y). Shipments excluding transportation edged 0.2% higher (-1.9% y/y) after a 0.4% rise. Unfilled orders improved 0.2% (-0.6% y/y) following no change. Backlogs outside of transportation eased 0.1% both m/m and y/y. Inventories of durable goods eased slightly (+3.3% y/y) after a 0.4% jump. Inventories less transportation also were little-changed (+1.9% y/y).

The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.

Current Federal Reserve Policy Under the Lens of Economic History: A Review Essay from the Federal Reserve Bank of St. Louis can be found here.

Durable Goods NAICS Classification Jul Jun May Jul Y/Y 2014 2013 2012
New Orders (SA, %) 2.0 4.1 -2.3 -19.6 6.8 2.2 6.3
  Transportation 4.7 10.7 -6.3 -39.7 6.1 6.5 16.6
Total Excluding Transportation 0.6 1.0 -0.3 -2.5 7.2 0.1 2.0
  Nondefense Capital Goods 1.1  10.6 -7.1 -41.0 6.6 2.8 10.8
    Excluding Aircraft 2.2 1.4 -0.8 -2.3 6.3 -1.0 7.6
Shipments 1.0 0.9 -0.4 -0.1 4.8 2.0 6.3
Inventories -0.0 0.4 -0.2 3.3 6.1 2.4 3.8
Unfilled Orders 0.2 0.0 -0.5 -0.6 11.4 6.4 7.5
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