Q2 Closes With A Durable Goods Whimper And 1.6% Y/Y Drop; Core Capex Orders Revised Much Lower; Shipments Tumble
After tumbling in May by 1.0% which was the biggest drop since the dreaded "polar vortex", Durable goods in June posted a modest pick up in June rising 0.7%, driven by yet another surge in aircraft and parts which rose by 8.2% for Nondefense aircraft and 15.3% for defense (thank you Russia). And while this beat expectations of a 0.5% increase, it was the first Y/Y drop in Durable goods since February (and since 2013 if one uses unrevised data).
Excluding volatile transportation, Durable Goods rose by 0.8%, also beating the expected 0.5% print, and higher than last month's 0.1%. Still, the Y/Y change in the category is hardly indicative of sustainable growth in manufacturing production, and certainly smashes any of the ISM and Markit PMI manufacturing surveys indicating an epic renaissance in US production.
There was some modest good news in the core capex orders, aka the Capital Goods Shipments non-defense ex air, which rose 1.4%, beating expectations of 0.5%, however, this was at the expense of a major downward revision to the May number which initially had risen 0.7% and now is said to have declined 1.2%, i.e. a more than complete wash.
Finally, the piece de resistance confirming the Q2 GDP recovery is once again indefinitely delayed, were core capex shipments, which tumbled -1.0% on expectations of a 0.4% boost, and May revised lower from 0.4% to 0.1%. Stick a fork in actual CapEx.
And now, bring on the downward GDP Q2 revisions...
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