2018 Economic Calendar
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Durable Goods Orders  
Released On 8/24/2018 8:30:00 AM For Jul, 2018
PriorPrior RevisedConsensusConsensus RangeActual
New Orders - M/M change1.0 %0.7 %-0.8 %-2.0 % to 4.0 %-1.7 %
Ex-transportation - M/M0.4 %0.1 %0.5 %-0.3 % to 1.0 %0.2 %
Core capital goods - M/M change0.6 %0.5 %0.4 % to 1.2 %1.4 %

A stunning showing for core capital goods orders steals the show in what looks on the surface, based on the 1.7 percent headline drop, to be a weak durable goods report for July. Orders for core capital goods (nondefense ex-aircraft) surged 1.4 percent to easily beat Econoday's consensus for a 0.5 percent gain and also top Econoday's high forecast for 1.2 percent. Computers & electronics as well as machinery were positive contributors for the capital goods group where July's strength points to further acceleration for what has already been very strong growth in business investment.

The headline weakness is tied to the always volatile commercial aircraft component where orders come in big batches, and July does not include one of those big batches as orders fell 35.4 percent. Orders for defense aircraft were also weak and together with commercial aircraft skew the transportation reading to a 5.3 percent decline. This decline masks another strong positive in today's report and that's a 3.5 percent jump in motor vehicle orders. Excluding all transportation equipment, orders inched 0.2 percent ahead in July.

Turning back to core capital goods, the surge in orders will feed into shipments which is what the GDP account for business investment specifically tracks. Shipments here are up 0.9 percent following a 2 tenths upward revised gain of also 0.9 percent in June. The July gain marks a fast start for third-quarter nonresidential fixed investment while the upward revision to June will give a small boost to revision estimates for second-quarter GDP.

Other details include a very large 1.3 percent build in durable inventories which had looked too lean going into the third quarter. Large builds for commercial aircraft equipment as well as continuing builds for primary metals and fabrications, both affected by tariffs, gave inventories a boost, one that will also be a plus for third-quarter GDP. Shipments of durables slipped 0.2 percent in the month and may reflect stubborn shortages of truck drivers in the transportation sector. Unfilled orders, which had been on the climb, were unchanged.

Durable goods are one of the most volatile indicators on the economic calendar and today's results further cement this reputation. But looking past the headline and at the strength of computers and machinery and vehicles, the factory sector continues to be the headline strength of the 2018 economy.

Consensus Outlook
A step back for aircraft is expected to pull down durable goods orders by 0.8 percent in July with ex-transportation, however, seen at a solid 0.5 percent gain. Core capital goods orders (nondefense ex-aircraft), which slowed in June, are also seen up 0.5 percent. Unfilled orders in this report have been rising which is a tangible confirmation of strength in the factory sector.

Durable goods orders are new orders placed with domestic manufacturers for factory hard goods. The report also contains information on shipments, unfilled orders and inventories. The advance release provides early estimates and is revised about a week later by the factory orders report.  Why Investors Care
Monthly fluctuations in durable goods orders are frequent and large and skew the underlying trend in the data. In fact, even the yearly change must be viewed carefully because of the volatility in this series.
Data Source: Haver Analytics

2018 Release Schedule
Released On: 1/262/273/234/265/256/277/268/249/2710/2511/2112/21
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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