Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  New Orders for Durable Goods Rose 3.4% in June
Posted Under: Data Watch • Durable Goods

Implications: Don't get too excited about the big headline 3.4% gain in new orders for durable goods in June; the underlying details of the report were good, but not overwhelmingly so, signaling that the economy is still a Plow Horse. Although the increase in orders for durables was slightly stronger than the 3.2% the consensus expected, the gain was almost all due to the very volatile transportation sector, specifically a 66.1% jump in civilian aircraft orders, which brought the overall transportation sector up 8.9% in June. The good news was that orders excluding transportation rose 0.8% as most major categories showed small gains. Orders for durables have been facing downward pressure from the drop in energy prices since the middle of last year. But, we believe the worst is over in energy price declines, meaning an ease in the downward pressure from this sector on orders for durables outside the transportation sector. The worst news in the report was that "core" shipments, which exclude defense and aircraft, declined 0.1% in June and were down at a 1.0% annual rate in Q2 versus the Q1 average. Plugging these and other recent data into our models, we are forecasting real GDP grew at a 2.8% annual rate in Q2. Expect stronger gains in orders for durables in the year ahead. Consumer purchasing power is growing with more jobs and higher incomes, while debt ratios remain very low, leaving room for an upswing in big-ticket spending. Meanwhile, profit margins are high, corporate balance sheets are loaded with cash, and capacity utilization is near long-term norms, leaving more room (and need) for business investment.

Click here for PDF version
Posted on Monday, July 27, 2015 @ 12:47 PM • Post Link Share: 
Print this post Printer Friendly

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.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2020 All rights reserved.