US durable goods orders unchanged in July, but details stronger

New orders for goods made to last at least three years undershot economists' forecasts in July, in part as an expected surge in civilian aircraft orders failed to materialise, even as those for defence aircraft nearly halved.

Yet the details of the report were nevertheless stronger than anticipated.

According to a preliminary estimate from the Department of Commerce, durable goods orders were unchanged last month at $273.5bn (consensus: 0.6%).

Helping to offset the shortfall, the rise in total orders for the previous month were revised higher by two tenths of a percentage point to 2.2%.

And excluding transportation, orders increased by 0.3%, beating the consensus for growth of 0.1%.

Similarly, core capital goods orders, which exclude both defence and aircraft, advanced by 0.4% over the month (Barclays Research: 0.0%) and those for May and June were revised higher by four tenths of a percentage point combined.

Orders for primary metals shrank by 1.4% month-on-month to $20.75bn, but those for fabricated metal products, machinery as well as for computers and electronic products were all higher.

Orders in the transportation sector dropped by 0.7% from June to reach $93.0bn, but the main drag came from a near halving in orders for defence aircraft to $4.84bn.

Meanwhile, orders for motor vehicles, civilian jets and all other durable goods rose.

In year-on-year terms, durable goods orders were ahead by 10.8% and by 9.7% in the case of core capital goods.

Commenting on the latest figures, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said orders for civilian aircraft had missed his own forecasts as did those for autos and parts, but added that the latter were trending "strongly" higher as the supply of chips improved.

But in particular he highlighted the steady growth in core capital goods orders and the fact that they were outperforming the ISM manufacturing survey with the gap having widened over the last few months.

As with retail, where people tell surveys that they are miserable and anxious, but have built up a "huge" pile of pandemic savings, so too businesses were sitting on piles of excess cash that were north of $700bn.