Durable Goods Orders Jump

The factory sector, after a frustrating first half of the year, is now definitely showing life. Durable goods orders jumped 4.4 percent in July in a headline gain exaggerated by a swing higher for commercial aircraft but including gains across most readings. Excluding the gain for aircraft and no change for autos, orders rose a very sizable 1.5 percent. And the strength includes core capital goods where the orders jumped 1.6 percent to show new demand for business equipment and machinery. This report together with last week's strong showing for manufacturing in the industrial production report point to second-half possibilities for the factory sector and its contribution to the nation's growth.

Recent History Of This Indicator:
Durable goods orders were very soft in June and May and forecasters see a big bounce back for July where the consensus is at plus 3.7 percent. But the great bulk of the jump reflects expectations for higher civilian aircraft orders. When excluding transportation, orders are expected to rise a less spectacular but still constructive 0.5 percent. Weakness in June orders, which plunged 4.0 percent, was widespread as was weakness in unfilled orders which plunged a very steep 0.9 percent. Capital goods orders did bounce back slightly in June but remain a stubborn weakness for the factory sector. It would take major gains in the July report, aside from aircraft, to improve what is a very flat outlook for manufacturing.