The Commerce Department reported on Wednesday durable goods orders dipped .01% after a 4.1% jump in July. The results were due to weak demand for automobiles. Economists had forecasted durable goods orders to remain unchanged for August.
Non defense capital goods orders excluding aircraft increases 1.1% last month after a dip of 0.2% for July. Non defense capital goods are a closely watched proxy for gauging business spending. This suggests that businesses are sitting on approximately $2 trillion in cash and not getting overly excited about the recent stock market volatility. Economists had expected a .03% rise in non defense capital goods.
Manufacturing, which has done the heavy lifting for the sluggish economic recovery, is slowing, But, August’s durable goods report pointed to underlying resilience and offered hope output would continue to expand.
Durable goods orders were also held back last month by an 8.5% drop in automobile orders. It was the largest decline since back in February. There was an increase in orders for civilian aircraft of 23.5%.
Unfilled orders for manufactured durable goods in August was up sixteen of the last seventeen months, increasing to $7.6 billion or 0.9% to $878.6 billion. This followed a 0.9% July increase. Transportation equipment, up eight consecutive months, had the largest increase, $6.0 billion or 1.2% to $507.6 billion.
The forecasting panel for the National Association for Business Economics predicts 2.2% growth in the second half of this year. For the full year, it predicts only 1.7% growth. That would be down from the 3% growth last year. That number is well below the pace needed to make a significant dent in the nation’s unemployment rate.
Other manufacturing data has been mixed. While factory output rose in August, nearly all the gain was from a 2.6% rise in the production of autos and auto parts. Regional Fed surveys showed that manufacturing continued to weaken in the Northeast and Mid-Atlantic area in September.