Durable goods orders held back by autos
|Durable goods orders rose just 0.4% in August as the pent up demand in the auto sector is showing some signs of exhaustion. The slowdown in core orders was more gradual and shows the capex recovery continues.
Auto Orders Retreat After Early Summer Surge
Durable goods orders slowed sharply in August, increasing just 0.4% after an upwardly revised gain of 11.7% in July. The downdraft stemmed in part from a 4.0% drop in motor vehicles as pent up demand from shutdowns shows signs of exhaustion.
Nondefense capital goods orders ex-aircraft (core orders), however, posted a better-than-expected gain of 1.8% on top of an upward revision to July.
Core Orders Point to Capex Recovery Continuing
The rise in core orders suggests that while slowing, the recovery in capex is not screeching to a halt and starting from a better place. Gains are also broadening beyond tech-related orders.
Nondefense capex shipments jumped 3.3% in August. Through the first two months of Q3, the series is up at a 33% annualized rate and signals equipment spending will be a key contributor to the third quarter's bounce back in GDP.
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