Durable goods orders is the final significant hard data element to be reported before Thursday’s report on Gross Domestic Product. The GDP report will include a multi-year revision in addition to second-quarter results,
Orders are expected to increase significantly due to an apparently known pickup in aircraft orders, but there is a wide variance in predictions. According to Yahoo’s economic calnendar, Briefing.com is predicting +5.5, while the “market” is going with +3.0 percent. That calendar also indicates that the previous month’s initial figures have been revised down to -2.2 percent from -1.8 percent.
Core duarable orders are expected to come in at +0.5 percent by Briefing.com and the “market.”
It will also be worth seeing how badly this year’s shipment, especially core shipments, continue to lag last yeear’s, which seems likely.
We’ll see here at 8:30.
HERE IT IS:
New orders for manufactured durable goods in June increased $7.7 billion or 3.4 percent to $235.3 billion, the U.S. Census Bureau announced today. This increase, up following two consecutive monthly decreases, followed a 2.1 percent May decrease. Excluding transportation, new orders increased 0.8 percent. Excluding defense, new orders increased 3.8 percent.
Shipments of manufactured durable goods in June, up following two consecutive monthly decreases, increased $0.3 billion or 0.1 percent to $239.4 billion. This followed a 0.3 percent May decrease.
Inventories of manufactured durable goods in June, up twenty-four of the last twenty-five months, increased $1.6 billion or 0.4 percent to $402.3 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.2 percent May decrease.
Considering revised changes of -1.7 percent and -2.1 percent in April and May, respectively, the net seasonally adjusted decrease during the quarter was -0.5 percent (.983 x .979 x 1.034).
There is good news on shipments. Raw shipments of $260.7 billion in June came in 3.2 percent ahead of the $252.6 billion seen in June 2014, a big improvement over May’s 0.3 percent year-over-year increase. Continued increases of this size will justify the unadjusted inventory buildup of 3.7 percent, but reversions back to what we saw in May won’t.
It would be even nicer if the rest of manufacturing and the wholesale sector were showing sales increase. They’re not — which lead inevitably to the mystery of how GDP can be higher at all than last year at this time when so many key elements of it are lower.
Speaking of GDP, Yahoo’s calendar currently shows an unusually large variance between the Briefing.com prediction on an annualized 1.3 percent increase and the “market” prediction of 2.6 percent. Meanwhile, the Atlanta Fed’s model is predicting +2.4 percent as of July 17, and Moody’s currently has +3.0 percent.
UPDATE: Zero Hedge claims that today’s report shows that a recession in imminent, but is basing it on a claimed “month over month 3.1% unadjusted decline I haven’t been able to verify.
My take is that today’s report isn’t all that bad, but is far from what we need to be seeing.
UPDATE 2, 11:35 A.M.: AP’s coverage of durable goods predicts 2.5 percent annualized second quarter GDP growth.