Durable Goods Orders: -1.7% month-over-month (Cons: -1.0%); +9.2% year-over-year
Durable Goods Shipments: -0.2% month-over-month; +7.5% year-over-year
NDCGXA Orders: +1.4% month-over-month (Cons: +0.5%); +8.5% year-over-year
NDCGXA Shipments: +0.9% month-over-month (Cons: +0.3%); +7.5% year-over-year
Durable goods orders fell more than expected in July but NDCGXA orders were higher than economists’ expectations. NDCGXA orders rose +1.4% in July, while June’s rise was revised up to +0.6% from +0.2% originally.
NDCGXA orders, which are a good proxy for business CapEx, have risen consistently since the beginning of Q2. Over the last four months, NDCGXA orders have averaged a +1.2% monthly increase. On a year-over-year basis, growth in NDCGXA orders was +8.5% in July, up from +8.2% as of June and the highest pace of growth since January.
Business investment has been a consistent contributor to real GDP growth since the beginning of the year, over which time year-over-year growth in NDCGXA orders has averaged +7.1%, higher than the average growth of +6.7% in 2017. While we do not anticipate NDCGXA order growth to sustainably return to the 10%+ levels seen in the early part of the economic cycle, we do note that recent trends are worth monitoring.
The strength in NDCGXA orders in July was driven by increases in computer and electronic products orders (+1.1% month-over-month) and machinery orders (+0.6%). Machinery orders, which make up approximately half of NDCGXA orders, were up +5.8% year-over-year.
NDCGXA shipments, which typically move in tandem with NDCGXA orders and flow into GDP readings, were also stronger than expected, rising +0.9% month-over-month in July. NDCGXA shipments were up +7.5% year-over-year, up from +7.3% growth in June.