Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  New Orders for Durable Goods Rose 0.2% in August
Posted Under: Data Watch • Durable Goods
Supporting Image for Blog Post

 

Implications:  New orders for durable goods rose 0.2% in August, handily beating the consensus estimate for a 1.1% decline.  And the August gain follows a 1.8% increase in June and a 2.0% jump in July.  Over the past three months, durable goods orders are up a strong 17.2% at an annualized rate, but remain down 3.0% in the past year.  The consensus expected a decline in August due to lower commercial airplane orders, which proved true with non-defense aircraft orders down 17.1% from July, but orders for defense aircraft surged in August, largely offsetting what would have otherwise been a much larger decline from the transportation sector.  Orders outside of the volatile transportation category rose 0.5% in August, as declining orders for electrical equipment and computers was more than offset by rising orders for primary metals, fabricated metal products, and machinery.  Arguably the most important number in today's report – "core" shipments of non-defense capital goods ex-aircraft (a key input for business investment in the calculation of GDP growth) – rose 0.4% in August, but, if unchanged in September, will be down at a 0.8% annualized rate in Q3 vs. the Q2 average.  That said, we don't expect this measure to be unchanged in September, but rather to move higher.  Orders for "core" capital goods (a proxy for business investment) are up at a healthy 3.0% annualized rate over the past three months.  As these orders flow through to shipments, we will see a return toward the trend seen in 2018, which posted the fastest full-year growth rate in "core" shipments since 2012.  Today's report adds to the litany of recent data suggesting the Fed has no reason for further rate cuts (in fact, the fundamentals suggest rates should be moving higher).  Does that mean the Fed will stand pat following last week's cut and return to data dependence moving forward? We wouldn't count on it. The markets have the Fed's ear, with wails of "uncertainty" drowning out what the bulk of the data are actually telling us about activity in the economy, and we expect to see one more rate cut – most likely in December – before the year is through.

Click here  for PDF version

Posted on Friday, September 27, 2019 @ 11:24 AM • Post Link 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.
Follow First Trust:  
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 © 2024 All rights reserved.