U.S. durable goods
Demand in June for longer-lasting goods proved slightly stronger than was estimated, but the latest reading on consumer demand was accompanied by weaker-than-previously-reported data.
While the headline reading showed durable goods order improved by 0.7% and two-tenths above forecast, shipments of capital goods fell by 1.0%. The May reading reversed direction to show a loss of 0.1% rather than a gain of 0.4%, which means two straight months of falling shipments. That’s important because the data is used to calculate GDP, and is unlikely to deliver the spring-back in demand that was initially expected following a weather-disrupted start to the year.
Nevertheless, the June reading for capital goods orders strengthened by 1.4% and should, despite a similar downwards revision for the prior month, soon deliver a recovery in shipments data. In sum, it’s hard to be impressed by the headline beat for durables, but it would be premature to sound disappointed. A jump in machinery orders of 2.4% last month was the strongest since March, while demand for primary metals expanded for a winning streak of five.
Chart: Capital goods shipments fell as orders rebounded.