US: Another disappointing durable goods orders report - Wells Fargo

According to analysts from Wells Fargo, the durable goods orders report fell short of expectations, “while much of the miss can be traced to aircraft and defense, core orders and shipments remain relatively weak, especially when compared to recent PMI readings.”

Key Quotes:

“In what has become an all too familiar pattern, durable goods orders once again disappointed in June. New orders fell 4.0 percent versus expectations for around a one percent decline, while previous month’s data were revised lower.”

“We have penciled in a modestly positive print for equipment spending in Friday’s first look at Q2 GDP despite the softness in new orders. Nondefense capital goods shipments, which are more indicative of current business spending, fell 1.3 percent in June.”

“The decline comes after two fairly strong months, however, and for the second quarter as a whole, nondefense capital goods shipments are up at a 1.6 percent annualized rate.”

“The decline in core orders in the second quarter hint that equipment spending may dip slightly again in the third quarter, but the modestly better trend and smaller inventories suggest that equipment spending should be stronger in the second half of the year.”