Very strong showings for capital goods data offset what a headline
decline of 0.8 percent in July factory orders. Orders for core capital
goods (nondefense ex-aircraft) surged 1.6 percent which follows gains of
0.8 percent and 0.7 percent in the two prior months and compares with a
1.4 percent initial August gain posted in last week's advance data on
durable goods.
Today's report includes initial data on nondurable
goods where orders edged 0.2 percent higher vs a 1.7 percent decline
on the durables side which is unrevised from the advance report. A 35
percent monthly downswing in commercial aircraft skewed the headline
lower in a report that otherwise shows solid monthly gains for
electrical equipment, machinery, mining & oil field equipment, motor
vehicles, and ships & boats. Turning to tariff-impacted industries,
orders for primary metals edged higher after edging lower in June with
aluminum orders falling sharply for a second month.
Turning back
to capital goods, core shipments jumped 1.0 percent for a second
straight month in results that are both revised 1 tenth higher from
prior data. These results point squarely at continuing strength if not
building strength for business investment.
A weakness in July's
data is no change for unfilled orders which, however, had been climbing
in prior months. A major strength in the report is a very large 0.8
percent build in inventories which, together with previously released
data on wholesale and retail inventories, point to a major build
underway and a major plus for the third-quarter GDP.
Despite the headline decline, the factory sector remains the leading strength of the 2018 economy.
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