Macro Flash Report

Durable Goods Orders

Takeaway:

July Durable Goods new orders show a rebound in transportation, the primary component of the dataset, while the additional sectors declined.

Durable Goods Orders & Durables Ex Transportation

Durable Goods Orders rebounded significantly, increasing by 9.9%, after a revised -6.9% decline in June. This marks the largest increase since May 2020 and far surpassed market expectations of a 4% rise.

• The strong performance has largely been attributed to a surge in aircraft orders (+12.9%).
• Transportation equipment orders further drove this notable gain (+4.8%).
• Fabricated metal products also saw a notable increase (+0.2%).
• Conversely, computers and electronic products (-0.7% ) and primary metals (-0.9%) orders declined.

Durables Ex Transportation declined by -0.2%, a shift from the 0.1% growth seen in June and missing the forecasted flat reading. This marks the largest decline in growth since January.

• This highlights the transportation sector’s role as a primary driver of growth for the month, particularly notable after its disappointing performance in the previous period.

Capital Goods Orders Ex Defense & Aircraft, a key indicator of business investment plans, fell by -0.1% in July, following a downwardly revised 0.5% increase in June.

• This decline suggests that businesses are becoming more cautious with their spending plans, mainly citing uncertainties surrounding the upcoming presidential election and concerns about future demand.
• Even with the potential for lower interest rates to boost demand, companies appear hesitant to move forward with new investments.
• This trend, a slowing in business spending, indicates that factory production may face challenges in gaining momentum in the coming months, which could weigh on overall manufacturing activity.