US durable goods orders fall short of forecasts in June, but underlying demand strong

According to the US Department of Commerce, durable goods orders grew at a month-on-month clip of 0.8% to reach $257.7bn.

That was less than 2.1% increase that economists had penciled-in, but was offset in part by an upwards revision to May's increase from 2.3% to 3.2%.

Worth noting, orders for motor vehicles and parts dipped by 0.3% on the month to reach $49.84bn, dragged lower by the ongoing global shortfall in semiconductor supplies.

Nonetheless, so-called 'core' capital goods orders, which excludes those for aircraft and from defence, were up by 0.5% on the month, as expected, alongside a small upwards revision to May's print.

More importantly, as Ian Shepherdson, chief economist at Pantheon Macroeconomics pointed out, they jumped at an annualised pace of 18.1% in the second quarter.

"The ISM manufacturing survey suggests orders growth will settle at about 10-to-15% in the third quarter. Bearing in mind that the pre-Covid trend was flat, this is a remarkable performance, thanks to soaring earnings and massive support from fiscal policy," Shepherdson explained.

"As a result, companies in aggregate are cash-rich, but they remain asset-constrained after a decade of under-investment following the financial crisis. Accordingly, we expect capex to continue rising at a rapid pace for the foreseeable future."