Durable Goods

August new orders of Durable Goods unexpectedly fell 2.4% headline vs a consensus rise of .4% and were flat ex transportation vs expectations of a gain of 1%. The prior month was revised a hair. Non Defense Capital Goods ex Aircraft, the core cap ex component, fell .4% after a 1.3% drop in July. Vehicles and parts orders rose .4% as production of auto’s ramp up after the Q2 lull. Machinery, primary and fabricated metals also rose but there were declines in computers/electronics and electrical equipment. Shipments, which get directly plugged into GDP, fell 1.4%. Inventories fell for a 12 straight month and the inventory to shipments ratio was unchanged at 1.80, the lowest since Nov ’08. Bottom line, with final consumer demand still muted, business investment outside of refilling shelves remains sluggish but those companies with large overseas exposure likely have more growth visibility than those that are more focused on the US.

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