Courtesy of Doug Short.
The August Advance Report on July Durable Goods was released this morning by the Census Bureau. Here is the summary on new orders:
New orders for manufactured durable goods in July increased $7.7 billion or 4.0 percent to $201.5 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 1.3 percent June decrease. Excluding transportation, new orders increased 0.7 percent. Excluding defense, new orders increased 4.8 percent.
Transportation equipment, also up two of the last three months, had the largest increase, $6.7 billion or 14.6 percent to $53.0 billion. This was led by nondefense aircraft and parts which increased $3.2 billion.
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The report came in stronger than the Briefing.com consensus estimate of 1.9 percent. Likewise the ex transportation number exceed the consensus forecast of -0.5 percent.
The first chart is an overlay of durable goods new orders and the S&P 500. We see an obvious correlation between the two. However, at this point, the correction in the market has not been accompanied by a contraction in goods orders in the latest report.
An overlay with unemployment also shows some correlation with unemployment (inverted). We saw unemployment begin to deteriorate prior to the peak in durable goods orders that closely coincided with the onset of the Great Recession. We’ll want to keep an eye on this correlation in the months ahead.
An overlay with GDP shows some disconnect in recent quarters between the recovery in new orders and the general decline in GDP — yet another comparison we’ll want to watch closely.
The next chart shows the percent change in orders with and without transportation (namely vehicle orders) since the turn of the century.
Now let’s exclude defense orders.
And finally, let’s look at core durable goods orders, excluding both Transportation and Defense.
The durable goods orders series is one of the more important indicators of the economy’s health.
