Durable Goods Orders (Ex-Transports) Beat Expectations In June

After surging higher in May, on the back of huge Boeing aircraft orders, US durable goods orders were expected to tumble back to earth in preliminary June data… and they did.

Durable Goods Orders plunged 9.3% MoM (slightly better than the -10.7% MoM expected) – the biggest drop since the COVID lockdowns. But as the chart below shows, it is a wildly noisy time series, almost entirely due to the lumpiness of aircraft orders…

Source: Bloomberg

Thanks to a swing from a 230% MoM rise to a 50% MoM decline in non-defense aircraft orders…

Source: Bloomberg

Excluding the noise of Boeing orders, the data was actually solid with a 0.25% MoM increase (better than the 0.1% rise expected) in durable goods orders (ex-Transports), pushing YoY orders uo 2.23%

Source: Bloomberg

Adding to the confusion, the value of core capital goods orders, a proxy for investment in equipment excluding aircraft and military hardware, decreased 0.7% last month after an upwardly revised 2% gain in May

Capital goods shipments rose 0.4%, excluding defense and commercial aircraft, better than the +0.2% expected, adding to Q2 GDP growth hopes.

A very mixed picture from a generally considered ‘secondary’ economic indicator… and this the market reaction is muted to say the least.