New orders for manufactured durable goods skyrocketed 9.9% to $289.6 billion in July, rebounding from a 6.9% decline in June and marking the biggest increase since May 2020, according to the latest Commerce Department data.
- Economists had predicted a 5.0% rise, but the actual numbers far exceeded expectations
- Durable goods orders have now risen in five of the last six months.
By the numbers: Durable Goods Orders Ex Defense surged 10.4% in July, indicating broad strength across various sectors.
- However, durable goods orders excluding transportation fell by 0.2%, signaling some underlying softness outside of the transportation sector.
Why it matters: Durable goods orders are a key indicator of economic health, showing the demand for long-lasting products like machinery and vehicles. The sharp jump in July points to renewed strength in the manufacturing sector, but the mixed signals in other components of the report raise questions about sustained momentum.
Zoom in: Core capital goods orders, seen as a leading indicator for business investment, slipped 0.1% after a 0.5% gain in June, indicating hesitancy in non-defense and non-transportation sectors.
- Shipments of core goods, which factor into GDP calculations, fell 0.4%, a potential drag on future economic growth.
What This Means For Rates: Higher durable goods orders is a sign of a strong economy. However, after Powell’s comments on Friday, the only real mover of rates these next few three weeks will be labor market data.
