Economic News Blog
Posted by: Steven Kline, Jr. 5. September 2016

Durable Goods Orders Hit Hard Two Months in a Row

(Neutral) Real durable goods new orders in July 2016 were $207,721 million. Compared with one year ago, durable goods new orders were down 6.8 percent, which marks the third time in five months that orders have decreased compared with one year ago. In June and July, durable goods orders have declined 7.1 and 6.8 percent, respecitvely. That are the two fastest rates of contraction since August 2012 (not counting the artificially large contraction in July 2015 due to inflated aerospace orders in July 2014). The annual rate of change, now -1.5 percent, contracted at a slower rate than last month, in fact its slowest rate since it began contracting in July 2015. However, it does appear that the annual rate of change will contract faster soon.

Motor vehicle and parts orders contracted 7.1 percent compared with one year ago. That was the first time MV&P orders contracted since November 2014. The annual rate of growth has decelerated to its slowest rate of growth since May 2010, which was the last time the annual rate of change contracted. 

Aerospace orders decreased in July 23.3 percent compared with one year ago. Aerospace orders contracted in four of the last six months. The annual rate of contraction decelerated dramatically in July but looks like it will contract faster very soon.

We use real durable goods new orders to forecast activity in metalcutting job shopsmetalworking, and durable goods.

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