Durable Goods Orders Rose 0.4% in August

Daniel Fowler
September 28, 2020

New orders for durable goods, or products created to last at least three years, rose 0.4% in August compared with July, short of economist forecasts for a 1.8% rise, the Commerce Department said Friday.

The Commerce Department reported Friday that the August advance marked the fourth consecutive increase but was far lower than the 11.7% surge seen in July.

Ian Shepherdson of Pantheon Macroeconomics said the 1.8 per cent growth in new orders for non-defense goods excluding aircraft indicated underlying strength in the report despite the disappointing overall growth. Durable-goods orders excluding aircraft and parts fell 0.8 percent for the month following gains of 8.3 percent in July and 15.8 percent in June.

Economists polled by Reuters had forecast orders for these goods gaining 0.5 per cent in August.

However Oren Klachkin of Oxford Economics warned the data foreshadowed future weakness in the sector's recovery as manufacturers struggle with the continued risk of COVID-19 and Congress remains deadlocked on more stimulus spending for consumers and business in the United States.

Durable Goods Order Rise for Fourth Straight Month

"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". Among the individual categories, primary metals rose 1.2 percent, fabricated metal products fell 1.3 percent, machinery orders were up 1.5 percent, computers and electronic products increased 1.2 percent, electrical equipment and appliances declined 1.5 percent, transportation equipment orders rose 0.5 percent, and the catch-all "other durables" category was up 0.6 percent. "Equipment spending will be a key contributor to the third-quarter's bounce back in GDP". The dollar gained versus a basket of currencies. Excluding transportation, durable goods orders climbed 0.4% in August, less than expected.

Shipments of core capital goods increased 1.5 per cent last month to the highest level since September 2014.

"Gains in business investment will be robust after contracting sharply in the first half of the year".

Orders for motor vehicles and parts dropped 4.0 per cent after accelerating 21.7 per cent in July. After two crashes in Indonesia and Ethiopia in March 2019, the grounding of Boeing's best-selling 737 MAX jet was also a burden on the company.

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