Durable Goods Fall 2.5% in June, But There’s Better News in the Details

June’s Durable goods orders were down 2.5%, the biggest drop in 5 months, on the back of weak demand for transportation and communication equipment. The Bloomberg consensus forecast stood at -0.6%. Making matters worse, May’s number was revised down to 1.3% from 1.8%.  There was some good news in the details at least; Durable good ex-transport products was actually up 1.1% in the month, and orders excluding transport and defense good was actually up 1.4% (vs 4.3% in May), well above the consensus forecast of 0.2%. Durable goods orders ex-tranps and defense goods tends to be a good forward looking indicator toward business spending.  Given this information the headline drop may seem more pessimistic than the actual data.  But, nevertheless still bad. Futures were trading down sharply on the news.

Durable Good Orders (y/y)

Source: US Census Bureau