US durable goods orders rose 0.3% in June, short of the 1.6% increase economists expected and only a partial rebound from May’s revised 4.0% decline. The report’s core business-investment gauge fared better: non-defense capital goods orders excluding aircraft rose 0.9% against a 0.8% forecast. The advance estimate of second-quarter GDP growth follows on Thursday.
New orders for U.S. manufactured durable goods rose 0.3% month-on-month in June, returning to positive territory after May’s revised 4.0% decline but falling short of expectations for a 1.6% increase. Excluding transportation, orders increased 0.6%, also below the 0.9% consensus, while orders excluding defense edged up 0.3%.
The headline miss did not, however, push business investment back into contraction.
Core capital goods orders beat the forecast
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.9% last month after an upwardly revised 1.9% increase in May, the Commerce Department’s Census Bureau said on Monday. Economists polled by Reuters had forecast a 0.8% advance after a previously reported 1.4% jump in May. Shipments of core capital goods, which feed the equipment-spending component of the GDP report, surged 1.9% after gaining 0.2% in May.
According to Reuters, the strength in orders and shipments was “pointing to a fairly solid pace of economic growth in the second quarter”.
Factory activity showed up elsewhere in the release too. Manufactured durable goods shipments rose $2.4 billion, or 0.7%, to $330.7 billion in June, following a 1.1% increase in May. Unfilled orders climbed $9.3 billion, or 0.6%, to $1.590 trillion, and have increased in 23 of the last 24 months.
Technology orders extend their run
Technology-related demand continued to stand out, with orders for computers and electronic products rising 3.1%, marking gains in nine of the past ten months. Durable goods orders have now increased in three of the past four months, suggesting May’s sharp decline was more of a setback than the start of a sustained downturn.
The overall picture, therefore, is one of moderating rather than weakening manufacturing activity.
GDP print lands Thursday
The government is scheduled to publish its advance estimate of second-quarter GDP growth on Thursday. A Reuters survey of economists estimated the economy grew at a 2.1% annualized rate last quarter, which would match the January-March quarter’s pace.
One reminder for traders: June’s durable goods numbers are only a first estimate, and the data receives its first significant revision with the Factory Orders report in early August.
Sources: ActionForex, Reuters via Investing.com, Investinglive (ForexLive)
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