U.S. durable goods make gains

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.

About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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