Durable Goods Headline Beat Hides Disappointing Slump In Business Spending

After a surprise tumble in July, preliminary August Durable Goods Orders were expected to rebound aggressively and rebound they did - jumping 4.5% MoM (+2.0%exp), the biggest jump since Feb '18.

 

However, scratch below the surface and things are not nearly as positive as the headline suggests.

Durable Goods Ex Transportation rose just 0.1% MoM in August, the weakest growth since January...

Well below the 0.4% expected jump.

However, it gets worse, as Capital Goods Orders Non-Defense, Ex Aircraft - the main proxy for business spending - tumbled 0.5%

Tow more notable aspects - car production dropped but war spending surged again...

  • Bookings for motor vehicles and parts fell 1 percent; communications equipment up 0.7 percent, computers and related products down 0.8 percent.

  • Defense capital-goods orders jumped 44.4 percent, most since February.

Thank goodness we are at war in so many places!!