Durable Goods Headline Swings Higher By Aircraft

A big swing higher for civilian aircraft skews August's durable goods headline which jumped 4.5 percent to hit Econoday's high estimate. But when excluding aircraft and other transportation equipment, durable goods orders inched only 0.1 percent higher which falls below Econoday's low estimate. And far below the low estimate are core capital goods orders (nondefense ex-aircraft) which fell 0.5 percent.

Orders for civilian aircraft surged 108 percent in the month but follow a 41 percent drop in July. Other categories of note include motor vehicles, down 1.0 percent, machinery up only 0.1 percent, computers & electronics down 0.5 percent, and fabricated metals which were unchanged. Gainers include primary metals at 0.9 percent and also communications equipment at 0.7 percent.

The drop for core capital goods does follow strong gains in prior months, including 1.5 percent in July, and though the drop points to a slip for related shipments, core capital goods shipments did rise 0.3 percent in August which will help the nonresidential fixed investment reading for third-quarter GDP.

And a major plus overall is an unusual 0.9 percent jump in total unfilled orders. Inventories drew down sharply in August, 0.4 percent lower but follow a 1.2 percent build in July and, for third-quarter GDP, will be offset by strong builds for wholesale and retail inventories where advance data were also released this morning.

This is a widely mixed report but underlying it is general strength for manufacturing, a sector that is still getting a boost from capital goods and which the economy is depending on for year-end strength.