Headline orders fine but ex transports not

July Durable Goods orders were up 4.2%, better than expectations of up 2.5% BUT, orders fell .4% ex transports and non defense capital goods ex aircraft were lower by 3.4% vs estimates of up .5% and down .2% respectively. Also, June was revised lower outside the headline figure. Boosting the headline number was a 12.8% rise in vehicles and parts and 53.9% gain in nondefense aircraft. Computers/electronics and primary metals were higher but orders for electrical equipment and machinery were down. Shipments were up 2.6% and because inventories were higher by just .7%, the inventory to shipments ratio fell to 1.60, the lowest Sept ’08. Bottom line, while volatile transports boosted the top line order number, the core cap ex component is down for the 4th month in the past 5 and likely reflects the reluctance on the part of companies to invest heavily in the current challenging global economic environment where visibility is very limited.

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