Durable orders up but Aug changed things

Headline Durable Goods rose 4%, twice expectations led by a 43.4% rise in nondefense aircraft orders and 11.5% gain in vehicles/parts as Japan supplies came back on line. Ex these and taking out defense aircraft saw orders rise .7%, better than expectations of down .5% and June was revised up. However, the core reading of non defense capital goods ex-aircraft fell by 1.5%, about in line with forecasts. Orders for computers/electronics and primary metals were up while electrical equipment, machinery and fab metals were lower. Shipments, which get directly plugged into GDP, rose 2.5% and because inventories rose just .8%, the inventory to shipments ratio fell to 1.79 from 1.82, the lowest since March. Bottom line, from the markets perspective, the unexpected gain in orders ex transports was enough to bring us back but the decline in the core cap ex component still points to a still very uneven economy and specifically, today’s data is from July and we know the world changed in Aug.

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