August 2017 Durable Goods Orders
Submitted by Atlas Indicators Investment Advisors on October 2nd, 2017
Durable Goods Orders increased 1.7 percent in August 2017 according to the Census Bureau’s most recent release. This uptick, the second of the last three months, reversed just a portion of the 6.8 percent decrease in July. Transportation’s 4.9 percent surge led this indicator higher; excluding this component leaves an improvement of 0.2 percent.
Atlas prefers looking at the core measure of this indicator, and it managed to improve 0.9 percent after increasing 1.1 percent a month earlier. This proxy for business confidence tracks purchases of nondefense capital goods excluding aircraft. These items are expected to last longer than three years and tend to be expensive. Firms seem to feel better about their prospects and were more willing to part with cash in the period.
This indicator is best known for its forward-looking nature (since orders become output in the future), but it also contains data that is more coincidental and relevant to the third quarter: shipments. These also turned higher in the period, rising 0.3 percent after an uptick of 0.1 percent in July. Core figures looked even better, increasing 0.7 percent in August and 1.1 percent to start the third quarter, boding well for the investment segment of the economy when gross domestic product for the third quarter (due out at the end of October) is released.
August data for this indicator were constructive. They demonstrated evidence of future growth in the orders segment and confirmed current growth with improving shipment figures. America’s economic expansion is not over, and this iteration of durable goods orders supports the claim.
