U.S. durable goods
One could imagine Ms. Yellen remarking, “Welcome to my world!” following the release of July durable goods data.
The report for longer-lasting consumer goods cuts right to the core of the central banking debate over the progress of the economy amid patchy data points. An air show in the U.K. last month helped spark the largest rebound on record for commercial aircraft. However, outside of the volatile transportation category, demand for goods weakened, but only after June data points were revised sharply higher.
It remains extremely difficult to spot a sustainable trend, or at least one different from the on-again-off-again growth picture that has been sufficient to prod the Fed to taper its bond purchases, but insufficient to tip the scales in favor of removing its easy monetary stance.
And so despite the July surge in the headline reading of 22.6%, the real picture is shown within a 0.5% decline in orders for capital goods, which is used as a proxy for business spending and executives’ outlook for the health of the economy.
The ex-transport reading for July durable goods orders also showed a decline of 0.8%, which followed a strong June gain of 3.0%, which in turn was revised higher by a factor of more than threefold. Outside of the transportation sector, each of the remaining five categories posted declines compared to the prior month.
And while the shipments reading for capital goods, which is used to calculate GDP, posted a healthy gain, the slumping orders line signals at least a slowing in the level of future readings. Within the transport numbers, auto demand was firm with a 10% gain, the largest jump since August 2009. Within the aircraft industry, the jump in commercial bookings was exemplified by a threefold increase in orders at Boeing to 324 planes.
Chart shows that durables gain on aircraft output while all other sectors suffered.