July's Durable Goods Orders Suggest Economy Is Stronger Than It Really Is
International Business Times
Published Aug 26, 2014 10:43AM ET
Updated Aug 26, 2014 11:15AM ET
July's Durable Goods Orders Suggest Economy Is Stronger Than It Really Is
By Meagan Clark -
A leap in July orders for long-lasting goods ranging from microwaves to airplanes suggest U.S. economic activity is stronger than it really is.
Orders grew 22.6 percent over the month from June, 8 percent more than economists polled expected, due to a more than 300 percent rise in commercial aircraft orders, the Commerce Department said Tuesday.
“Since GDP measures output produced rather than orders received, this won’t boost GDP until those orders are completed late this decade,” Paul Dales, senior U.S. economist for Capital Economics, wrote in a research note Tuesday.
The overall increase is the steepest since 1992 and reflects strong sales at aircraft manufacturer Boeing Co. NYSE:BA. Boeing reported a record 324 planes sold in July for about $80 billion, though only two-thirds have showed up in the federal data so far, according to Michael Montgomery, U.S. economist for IHS Global Insight.
“It was still a great month excluding the Boeing-blowout because motor vehicles orders spiked by double-digits due to abnormal strength in July,” Montgomery said.
Excluding transport orders, durable goods orders fell 0.8 percent, after rising 3 percent in June. As for current activity, shipments of non-transport, non-defense goods increased 1.5 percent in July. This suggests business investment in equipment is on track to rise rapidly in the third quarter, Dales said.
“With some producers starting to push up against capacity constraints and loans to businesses rising at a rapid rate, we suspect that investment will prove to be one of the economy’s bright spots in the second half of this year,” Dales said.
Get The News You Want
Written By: International Business Times
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.