Durables orders edged down in August, but after such a strong July, the pace is still healthy. New factory orders for durables in August nudged down 0.1 percent, following a 4.1 percent surge in July (previously up 4.1 percent from the factory orders report). The August dip came in a little lower than analysts' forecast for a 0.2 percent gain. Excluding transportation, durables slipped 0.1 percent after rising 0.7 percent in July (factory orders report revision).
Components were mixed. On the downside in August were primary metals, down 0.8 percent; fabricated metals, down 0.5 percent; transportation, down 0.3 percent; and "other," down 0.8 percent. On the plus side were machinery, up 0.1 percent; computers & electronics, up 1.3 percent; and electrical equipment, up 1.3 percent.
Within the important transportation component, motor vehicles fell 8.5 percent after a 10.2 percent jump in July. Nondefense aircraft increased a monthly 23.5 percent in August, following a 49.9 percent surge the month before. And defense aircraft advanced 22.5 percent after edging up 0.1 percent the month before.
Looking at private capital equipment related numbers, a big positive was a 1.1 percent rebound in nondefense capital goods excluding aircraft, following a 0.2 percent decline in July. Shipments for this series jumped 2.8 percent in August after a 0.4 percent rise the month before.
Overall, today's report indicates that despite sluggishness elsewhere in the economy, manufacturing remains on a moderate uptrend, taking into account the volatility of durables orders. While businesses may not be hiring people, it clearly looks like they are "hiring" equipment with the rise in nondefense capital goods excluding aircraft. This will be a plus for third quarter equipment investment and export components.
Market Consensus before announcement
Durable goods orders in July surged a revised 4.1 percent with the motor vehicle component up 9.8 percent in what appears to be the hoped for snapback from an earlier shortage of Japanese parts. Nondefense aircraft orders, which nearly always show wide month-to-month swings, rose 43.4 percent and together with motor vehicles made for a 14.8 percent jump in the transportation category. Excluding transportation, new orders rose a solid revised 0.8 percent in July.