US Durable Goods Orders Drop In July, ‘Unadjusted’ Motor Vehicles Orders Tumble

US Durable Goods Orders Drop In July, ‘Unadjusted’ Motor Vehicles Orders Tumble

As sentiment towards buying conditions crashes (UMich) in America, analysts expected a modest pull back in durable goods orders in preliminary July data, and they were right, but the 0.1% MoM drop in Durable Goods Orders was less than the -0.3% MoM expected (reflecting a pullback in orders for commercial aircraft).

Source: Bloomberg

And while Ex-Transports, orders beat expectations, we note that Capital Goods Orders non-defense, ex-aircraft (a proxy for business spending) was unchanged in July (after an upward revision from +0.7% to +1.0% MoM in June)…

Source: Bloomberg

This marks a pause in the months-long buildup in capital investment.

It does appear that a fair amount of “seasonal adjustment” is skewing this data dramatically as we note that while Motor Vehicles & Parts were a big driver of the outperformance, on a non-seasonally-adjusted basis, orders tumbled to their lowest since May 2020

Source: Bloomberg

Critically, if one assumes the same decline in SA autos as was recorded in NSA (down $6 billion), the Durable goods orders print would be a 2.3% drop!

Not exactly a great time to be tapering?

Tyler Durden
Wed, 08/25/2021 – 08:40

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