US Durable Goods Orders Drop In July, 'Unadjusted' Motor Vehicles Orders Tumble

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by Tyler Durden
Wednesday, Aug 25, 2021 - 08:40 AM

As sentiment towards buying conditions crashes (UMich) in America, analysts expected a modest pull back in durable goods orders in preliminary July data, and they were right, but the 0.1% MoM drop in Durable Goods Orders was less than the -0.3% MoM expected (reflecting a pullback in orders for commercial aircraft).

Source: Bloomberg

And while Ex-Transports, orders beat expectations, we note that Capital Goods Orders non-defense, ex-aircraft (a proxy for business spending) was unchanged in July (after an upward revision from +0.7% to +1.0% MoM in June)...

Source: Bloomberg

This marks a pause in the months-long buildup in capital investment.

It does appear that a fair amount of "seasonal adjustment" is skewing this data dramatically as we note that while Motor Vehicles & Parts were a big driver of the outperformance, on a non-seasonally-adjusted basis, orders tumbled to their lowest since May 2020...

Source: Bloomberg

Critically, if one assumes the same decline in SA autos as was recorded in NSA (down $6 billion), the Durable goods orders print would be a 2.3% drop!

Not exactly a great time to be tapering?