It was just 2 months ago when the one-off Boeing order-related idiocy distorted the entire time series and was thus extrapolated into escape velocity dreams by prognosticators everywhere. Excused by the cognoscenti as a "volatile time series," Durable Goods new orders dropped 1.3% MoM, missing expectations by the most since Dec 2013 and negative for the 2nd month in a row. Last month's drop was revised lower also. Even more concerning is the 1.7% drop MoM in Core Capex, the biggest miss in over a year and biggest drop since January. Did it snow in September?
The headline summary via BBG:
- Durable goods new orders fell 18.3% in Aug., the Census Bureau said
- New orders ex-trans. fell 0.2% in Sept. after 0.7% rise
- New orders ex-defense fell 1.5% in Sept. after 19.1% fall
- Non-defense capital goods orders ex-aircraft fell 1.7% in Sept.
- Non-defense capital goods ex-air 3 mo. avg. annualized rose 10.4%
- Non-defense capital goods shipments ex-aircraft fell 0.2% in Sept. after 0.1% rise
Snark aside, it was time to find scapegoats why for another month, the 5 year delayed CapEx renaissance is still missing. Bloomberg promptly came [5]up with a convenient one: Europe.
Companies are looking for more signs of sustained consumer demand before making high-dollar investments, even as households benefit from strong job gains and pared-down debt. As markets in Europe and emerging nations slow, fewer exports will probably also damp orders in coming months, indicating American manufacturing will cool.
“Exports aren’t doing anything great because Europe’s in a really bad funk,” Michael Montgomery, U.S. economist at IHS Global Insights in Lexington, Massachusetts. “Prospects for sales one or two years down the line are decent, but they’re not booming.”
Well, "Europe" is at least better than the weather. But just wait until Ebola is blamed in 2-3 months.
And now, time to start cutting those Q4 GDP forecasts.
Durable Goods prints 2nd miss and 2nd drop in a row
[6]
And Core Capex - Capital goods new orders ex defense ex-aircraft - dropped most since January
[7]
The Y/Y change in headline durables, noe the Boeing distortion.
[8]
And core CapEx: there is still much more room to fall.
[9]
So how long until Obama issues an executive order banning stock buybacks and demanding all excess cash be spent on "growth"?
