Economic Watch: Capital Goods Orders Shine in Manufacturing Report
Shipments and new orders of manufactured durable goods, including a key economic indicator inside this sector, posted impressive gains in July, according to a new Commerce Department report, but it’s hardly a long-term trend.
Evan Lockridge・Former Business Contributing Editor
August 26, 2015
2 min to read
Shipments and new orders of manufactured durable goods, including a key economic indicator inside this sector, posted impressive gains in July, according to a new Commerce Department report, but it’s hardly a long-term trend.
Shipments or these items, designed to last three years or more, increased 1% from June, marking the second straight monthly gain. It was led by a 2.5% increase in transportation orders, which also moved higher for the second consecutive month.
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New durable goods orders increased 2% in July, following a 4.1% increase in June, marking two month-to-month improvements. It was also led by the transportation, with orders increasing 4.7% in June. Excluding transportation orders, the July increase was 0.6%.
In the key nondefense new order category for capital goods, July saw a 1.1% increase from June while these shipments moved higher by just 0.1%. However, when nondefense new orders excluding aircraft are examined, an indicator of future business investment, the increase totaled 2.2% in July, the biggest gain since June 2014, while these shipments saw a 0.6% improvement. June’s order volume was revised upward to show a 1.4% gain from the month before.
“A better-than-expected increase in durable orders at the start of the third quarter suggests concerns over outright weakness may be overstated. Still, with the annual rate of business investment still firmly in the red, there remain concerns that corporate development and expansion will remain limited in the second half of the year,” said Lindsey Piegza, chief economist at Stifel Fixed Income. “Against the backdrop of ongoing angst in the equity markets, this morning's tidbit of good news is much appreciated, even if one month's data point does little to suggest a lasting upward trend.”
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