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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | Durable goods orders rise 1.9% in May |
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| Posted Under: Data Watch • Durable Goods |
Implications: The economy is still alive and kicking, and today's report on durable goods shows it. New orders for durable goods increased 1.9% in May, beating the expected increase of 1.5%, and were revised up for April as well. Most of the gain in May was due to civilian aircraft, which are very volatile from month to month. However, excluding the transportation sector, orders were still up 0.6% in May and up 1.9% including upward revisions for April. Moreover, the gains in May were widespread, with almost every major category of orders increasing. In other words, this is not just a Boeing story. Shipments of "core" capital goods (which exclude civilian aircraft and defense and which the government uses to calculate GDP) bounced back 1.4% in May. These shipments are up 7.7% versus a year ago and up at a much faster 14.9% annual rate in the past three months. Given record corporate profits and balance sheet cash, relatively low borrowing rates in the corporate sector, a recent rise in commercial and industrial lending, plus full expensing for tax purposes for 2011, we believe business investment will continue to increase substantially for at least the next couple of years.
Click here to view the entire report.
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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