U.S. Durable Goods Orders Beat Market Expectations in June

Daily Forex Fundamentals | Written by TD Bank Financial Group | Jul 25 08 14:06 GMT |

U.S. durable goods orders rose by a fairly strong 0.8% M/M, with orders excluding transportation advancing by a more substantial 2.0% M/M. Core capital goods orders rose by 1.4% M/M, with the 3-month annualized pace rising to a whopping 10.4% clip. The details of this report were fairly strong, as most industries posted gains on the month. U.S. durable goods orders rose by a stronger than expected 0.8% M/M in June, beating the market consensus for a 0.3% M/M drop. The increase follows the upwardly revised 0.1% M/M advance in May (previously reported as a flat print). On a year ago basis, however, durable goods order are still down 1.3%. Excluding transportation, orders are up by a much stronger 2.0% M/M, which is the biggest monthly increase in this indicator since December last year. The more important core capital goods orders were also strong, posting a robust 1.4% M/M gain, following the 0.1% M/M drop in May. The 3-month annualized trend in core capital goods orders rose to a whopping 10.4% clip from 0.4% in May. The details of the report were quite strong, with only one industry posting a drop in the value of new orders during the month. In particular, there were strong gains in orders for electrical equipment (up 5.0% M/M), machinery (up 2.3% M/M), primary metals (up 5.1% M/M) and fabricated metals (up 1.7% M/M). However, orders for computers and electronics dropped by 0.5% M/M. Shipments also advanced during the month, rising by 0.5% M/M, following the 1.2% M/M drop in May. However, despite the increase in shipments, the inventory to shipments ratio remained unchanged at 1.57 in June. There is no doubt that this is a very strong report, as it suggests that the U.S. manufacturing sector continues to hang in there despite the considerable headwind of a slowing domestic economy that it continues to faces. However, we believe that this momentum is unlikely to be sustained in the coming months as the weight of sagging domestic demand outweighs the crucial support provided by strong export demand. TD Bank Financial Group The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.