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July Durable Goods: New Orders Down 0.1%, Shipments Up 2.2%, Inventories Up 0.6%

Angry Bear | August 28, 2021 12:30 pm

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US/Global Economics

July Durable Goods: New Orders Down 0.1%, Shipments Up 2.2%, Inventories Up 0.6%, Commenter and also Blogger at MarketWatch 666

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for July (pdf) from the Census Bureau reported the value of the widely watched new orders for manufactured durable goods fell by $0.4 billion or by 0.1 percent to $246.9 billion in July, following a revised increase of 0.8% to $257.6 billion in June’s new orders, statistically unchanged from the increase reported a month ago . . . with that modest July decrease, year to date new orders are now running 25.3% above those of 2020, a decrease from the 26.8% year-to date change we saw in this report last month…

As is usually the case, the volatile monthly change in new orders for transportation equipment drove this month’s headline change, as those transportation equipment orders fell $1.7 billion or 2.2 percent to $75.3 billion, on a 48.9% decrease to $7,374 million in new orders for commercial aircraft . . . excluding new orders for ‘transportation’ equipment, other new orders were up 0.7% in July, even though new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment, remained statistically unchanged at $76,534 million…

The seasonally adjusted value of July’s shipments of durable goods, which will be inputs into various components of 3rd quarter GDP after adjusting for changes in prices, rose by $5.6 billion or 2.2 percent to $257.8 billion, after the value of June shipments was revised from $250.7 billion to $252.2 billion, now a 1.6% increase from those of May . . . a 4.6% jump in shipments of transportation equipment led the July shipments increase, as they rose $3.4 billion to $75.9 billion on a 5.9% increase in shipments of motor vehicles . . . excluding shipments of transportation equipment, shipments of other durable goods rose 1.2%, while shipments of nondefense capital goods excluding aircraft were up 1.0% to $74,484 million, an increase that will be reflected in 3rd quarter GDP equipment investment figures…

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the sixth consecutive month, increasing by $2.7 billion or 0.6 percent to $453.6 billion, after end of June durable goods inventories were revised from $450.5 billion to $451.0 billion, still a 0.9% increase from May . . . an increase of $0.8 billion or 1.9 percent to $40.05 billion in inventories of primary metals was major factor in the inventory increase, while inventories of transportation equipment rose less than $0.3 billion or 0.2 percent to $151.8 billion . . . excluding inventories of transportation equipment, all other durable goods inventories increased 0.8% to $301,873 million…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but obviously volatile new orders, also rose for the sixth consecutive month, increasing by $3.9 billion or 0.3 percent to $1,225.4 billion . . . that followed a June increase of 0.8% to $1,221.5 billion that was was revised from the previously reported 0.9% increase to $1,223 billion . . . a $2.3 billion or 2.1 percent increase to $109.2 billion in unfilled orders for machinery led the July increase, while a $0.65 billion or 0.1 percent decrease to $811,846 million in unfilled orders for transportation equipment limited the overall increase, as unfilled orders excluding transportation equipment were up 1.1% to $413,523 million . . . compared to a year earlier, the unfilled order book for durable goods is now 2.3% above the level of last July, even as unfilled orders for transportation equipment are still 3.3% below their year ago level, despite a 16.2% increase in the backlog of orders for motor vehicles and parts…

3 Comments

Fred C. Dobbs says:

August 28, 2021 at 7:40 pm

Why Would an Economist Ever Look on the Bright Side?

America’s dismal scientists can paint even a blue-sky outlook gray.

The country is experiencing the fastest economic rebound in at least a generation, but Wall Street and Washington are hardly taking a victory lap. In any other environment, the 6.3 percent pace of expansion economists have penciled in for the United States this year would represent a victory. They do acknowledge that it is a solid rebound after the shock and slump of 2020. But that doesn’t stop them from fretting about every incoming piece of data, and how quickly it can go from good to terrible.

Is the job market recovery poised to slow? Are we about to slip into a slow-growth, high-inflation stagflation? In the murky, Delta-infused post-pandemic recovery, behind every good economic data point lurks potential disaster. …

Consumers are buying goods and services at a rapid clip. They are making big investments, notably in houses, that could lead to knock-on spending on washing machines and lawn care products. Employers are hiring people in numbers that would have been shockingly high in any other environment, and the pace of job gains has picked up in recent months.

But there are reasons for the moment’s angst — and many of them tie back to inflation. Price gains have picked up rapidly, spurring a collective freak-out, causing some Fed officials to fret about their easy-money policy setting. Republicans harp on monthly data reports, convinced that attacking the Biden White House on rapid price gains is a winning political strategy. Economists in the White House itself play down the data.

What often gets lost in the mix is the reality that inflation can be a feature, not a bug, of a rapid rebound. Fed officials spent years of waiting, hoping and wishing for faster price gains that might lift consumer inflation expectations from uncomfortably low levels. …

… The pop in prices has helped to nudge longer-run price expectations back to healthier levels, in the neighborhood of where policymakers typically think they need to be to help the Fed hit its inflation target.

Jerome H. Powell made just that point in a speech on Friday at the central bank’s most closely-watched annual conference. The Fed chair said that the recent move up in expectations is a “welcome reversal” of the previous decline.

Yet even Mr. Powell, who had a positive story to tell about the job market’s rapid rebound and the abundant signs that high inflation is likely to prove transitory, had to include a dose of worrywart.

“Inflation at these levels is, of course, a cause for concern,” he acknowledged.

It is undeniable that inflation is running hotter than just about anyone anticipated. And few would argue that the current pace, if sustained, would be good news. But then, few would argue that the current pace of inflation will be sustained. …
Fred C. Dobbs says:

August 29, 2021 at 11:22 am

Paul Krugman: The Gentrification of Blue America

In my latest column, motivated by the California recall, I pointed out that the Golden State’s left turn on policy hasn’t produced the economic collapse that conservatives predicted. On the contrary, the state’s economy has boomed, even as it keeps getting trash-talked by the business press: Between the election of Jerry Brown and the Covid-19 pandemic, both output and employment grew about as fast in California as they did in Texas.

It has, however, been a peculiar kind of boom, one in which more Americans have moved out of California than have moved in.

Economists trying to understand the rise and fall of regions within a country often rely on some form of economic base analysis. The idea is that a region’s overall growth is determined by the performance of its export industries — that is, industries that sell mainly to customers outside the region, such as the technology firms of Silicon Valley and the Los Angeles entertainment complex (or, here in New York, the financial industry). Growth in these industries, however, generates a lot of growth in other sectors, from health care to retail trade, driven by the local spending of the base industries’ companies and employees.

But base analysis suggests that when a state has a booming export sector, as California does, it should be seeing growth in more or less everything. Instead, what we see in California is that while highly educated workers are moving in to serve the tech boom, less educated workers are moving out: (graphic at the link) …
- Fred C. Dobbs says:
  
  August 29, 2021 at 11:35 am
  
  PK’s ‘latest column’
  
  Paul Krugman: California Could Throw Away What It’s Won
  
  (Basically, the gubernatorial recall election, brought about by a petition pushed hard by CA’s right-wing to make the election happen, can cast Dem Gavin Newsom out of office, mainly for attending a dinner maskless, and for being progressive. If a majority of CA voters, in what is likely to be a low-turnout election, vote against him, he will likely be replaced by a right-wing GOPster with maybe 20% of the vote. Best hope is that enough Dems turn out and vote to keep Newsom in office.)