Durable Goods Orders Down 2.2 Percent, Core Capital Goods Down 0.7 Percent

IMG Auteur
Published : June 24th, 2016
382 words - Reading time : 0 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Opinions and Analysis

Turning our eyes away from Brexit for a moment, durable goods orders sank 2.2% vs. the Bloomberg Econoday economist’s expectation of -0.7%.

One economist actually guessed +4.9%.

Highlights

May proved to be a generally weak month for the factory sector. Minus signs spread across the durable goods report with total new orders down a very sizable 2.2 percent and ex-transportation orders, which exclude aircraft and vehicles, down 0.3 percent.

The worst news comes from capital goods, a sector where weakness points to weakness in business investment and ultimately the nation’s productivity. Orders for core capital goods fell 0.7 percent in the month while shipments, which are inputs into the nonresidential investment component of GDP, fell 0.5 percent.

Overall shipments also fell, down 0.2 percent with inventories in thankful contraction, down 0.3 percent and holding the inventory-to-shipments ratio unchanged at 1.65. Unfilled orders, which outside of April’s 0.6 percent gain have not been strong, rose a modest 0.2 percent in May.

Vehicles, like they were in the industrial production report, were once again very weak with orders down 2.8 percent and shipments down 3.4 percent. Vehicle sales, however, have been solid and point to a rebound for the related factory data. Orders and shipments for commercial aircraft remain solid with orders in May up an unusually tame 1.0 percent. Machinery orders, at the heart of the capital goods group, are down for a second month with both primary and fabricated metals showing order declines.

The decline in capital goods is certain to pull back second-quarter GDP estimates which, in the 2 percent range, aren’t that strong to begin with. The dollar’s decline this year has not done much to lift exports or the factory sector which going into Brexit, and the ensuing spike in the dollar, was simply flat.

Recent History

Durable orders have been up and down with forecasts no less so. The range for May orders is between a 2.5 percent drop and a 4.9 percent surge with the ex-transportation range also wide, at minus 0.8 to plus 0.5 percent. Monthly swings aside, trends in this report have been flat with capital goods, however, turning lower in what is a negative indication for business investment.

Capital Goods

24hGold - Durable Goods Orders...

Above table from the Census Department Advance Report on Durable Goods.

Mike “Mish” Shedlock

Source : mishtalk.com
Data and Statistics for these countries : Georgia | All
Gold and Silver Prices for these countries : Georgia | All
<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
IMG Auteur
Mish 13 abonnés
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
WebsiteSubscribe to his services
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Take advantage of rising gold stocks
  • Subscribe to our weekly mining market briefing.
  • Receive our research reports on junior mining companies
    with the strongest potential
  • Free service, your email is safe
  • Limited offer, register now !
Go to website.