US: Durable goods orders are likely to have rebounded in July - RBS

Research Team at RBS, suggests that following outsized declines in both May and June, US durable goods orders are likely to have rebounded in July.

Key Quotes

“Indeed, we look for durable goods orders to have bounced by 3.5% in the month, boosted by a rebound in civilian aircraft. Despite receiving fewer new orders at this year’s Farnborough Airshow than at last year’s Paris Air Show, Boeing reported 73 new plane bookings in July, up sharply from only 12 in June (though down from over 100 new orders in July 2015). Defense orders may also have rebounded following three straight monthly declines. Excluding defense and aircraft, we look for new orders to have risen by 1.2%, which would be the strongest performance since January.

We look for another healthy gain in automotive bookings (building on June’s 2.4% rise), consistent with the hefty increase in auto production planned for July. In addition, core capital goods orders (a key proxy for business spending) may have firmed by 0.5% in July, about the same pace as June, which would mark the first back-to-back gains since early 2015. Another increase in this area would represent a welcome development, perhaps setting the stage for a rebound capital spending in Q3 after three consecutive quarterly declines (which has not been seen previously outside of a recession).”