Durable goods orders rose 0.2% in August after increasing an unrevised 2.0% in July. The
number for August translates into $454m in new orders and marks the third monthly increase
in a row.
WHY DO I CARE?
While the upturn is not large, it implies consistent growth in the sale of goods that have an expected life of more than one year. This is considered a leading indicator and a positive sign or economic growth.
WAS THERE A BIG SURPRISE?
An increase that is 1.4% above expectations is not a big surprise in durable goods, which can have large swings due to the high value of individual orders for things like aircraft, which is the case in this report. Still, this is a positive surprise and is made more credible by the fact that the number has been consistently positive for three months in a row.
The strength in this report came primarily from an increase in defense aircraft orders, which grew $2.1 billion. This was largely offset by a decrease of $1.9 billion in non-defense aircraft. In addition, auto sales went down $0.5 billion. There was strength in primary and fabricated metals and in machinery as well.
As we noted last month, the weakness in durable goods between February and May was troublesome in that it coincided with other indicators that corporate investment and industrial activity were slowing down. In the third quarter, this weakness in manufacturing and industry seems to be moderating, and, so, it is likely to contribute positively to GDP growth rather than subtract as it did in the second quarter.
Erik Olsen is Co-Founder and Managing Partner of CataMetrics Management, LLC. Catametrics
provides portfolio-construction methodologies, strategic marketing and investment-management
expertise to investment advisers and their clients.
The above is the opinion of the author and should not be relied upon as investment advice or a forecast
of the future. It is not a recommendation, offer or solicitation to buy or sell any securities or implement
any investment strategy. It is for informational purposes only. The above statistics, data, anecdotes and
opinions are assumed to be true and accurate however 3D Asset Management does not warrant the
accuracy of any of these. There is also no assurance that any of the above is all inclusive or complete.
3D does not approve or otherwise endorse the information contained in links to third-party sources.
3D is not affiliated with the providers of third-party information and is not responsible for the accuracy
of the information contained therein.
Past performance is no guarantee of future results. None of the services offered by 3D Asset Management
are insured by the FDIC and the reader is reminded that all investments contain risk. The opinions offered
above are as of August 15, 2019 and are subject to change as influencing factors change.
More detail regarding 3D Asset Management, its products, services, personnel, fees and investment
methodologies are available in the firm’s Form ADV Part 2A which is available upon request by calling
(860) 291-1998, option 2 or emailing email@example.com or visiting 3D’s website at
Click here to read more