September 27, 2022 | 09:23
Durable Strength in Core Orders
U.S. durable goods orders fell for the second straight month, down 0.2% in August. Transportation was the biggest drag (-1.1%) amid another retreat in aircraft sales, even as motor vehicles and parts rebounded 0.3%.
Looking beneath the hood however, the details were generally more positive with most components posting decent growth. Excluding transportation, orders climbed 0.2%, extending gains for the sixth straight month. Primary metals rebounded 0.4%, while machinery (+0.3%) and electrical equipment/appliances (+1.0%) continued to extend record highs. Meantime, computers and electronics (+0.8%) climbed to the highest since 2008. All this suggests that, despite rapidly rising interest rates, businesses are continuing to invest in technology and equipment amid ongoing labour constraints. Core capital goods orders, used to calculate equipment spending in the GDP tally, jumped 1.3%. That follows an upwardly revised 0.7% gain in the prior month and flags a nice rebound in Q3 capex spending.
Bottom Line: Orders for core capital goods jumped the most since the start of this year, suggesting that demand for business equipment remain healthy... for now, despite a darkening economic outlook and quickly tightening financial conditions.