Durable Goods Orders Shoot Higher in July

Durable goods orders popped +5.9% MoM (consensus +1%) in July, and are up +9.3% YoY. This is the fifth increase in the past six months, and brings the series to a record high.

Though defense orders rose a massive 35.7% MoM (+12.3% YoY), the largest increase since January, non-defense new orders still rose a substantial +4.9% MoM (+9.2% YoY). Ex-transportation rose +3.7% MoM (+2.2% YoY).

Capital goods orders rose +8.3% MoM, and have risen +15.9% YoY. Transportation rose +10.8% MoM with non-defense aircraft orders (Boeing) rising +12.6% MoM. Over the past 12 months, non-defense aircraft orders have risen 131% YoY, while autos and trucks have risen 9.5% YoY. Computers also saw good demand, rising +7.4% MoM (+.5% YoY), as did primary metals at +7.9% MoM (+1.5% YoY) and machinery orders +5.5% MoM (+6.1% YoY).

The only category to see a decline in orders in July was electronic goods, which fell -1.2% MoM (+.9% YoY).

Shipments rose a more modest +3.9% MoM (+4.7% YoY) with capital goods shipments rising +2.2% MoM (+1.8% YoY), defense shipments rising +9.1% MoM (+11.2% YoY), and transportation also rising +9.1% MoM (+13.4% YoY). Shipments of durable manufactured goods have risen in four of the past five months, and are also at a record high.

Inventories rose .1% MoM and have risen +4.1% YoY. The inventory to shipments ratio has plunged on the increased demand, falling to 1.42 months, the lowest level of the year. In June the I/S ration was at 1.48 months.

Unfilled orders remain high, rising +2.4% MoM, and are up 21% YoY, and have been trending steadily higher for over two years to a record high. Transportation equipment had the largest monthly increase at +3.1% MoM, continuing an 18 month string of advances.

Net, this was a very strong report on manufacturing demand - much stronger than expected, with good breadth across industries. Last month's data was also revised higher, with June's durable goods orders rising +1.9% MoM instead of the originally reported +1.4%.