mishtalk.com / Mike “Mish” Shedlock / October 5, 2016
Factory orders rose 0.2% in August vs. a Bloomberg Econoday Consensus estimate of -0.2%.
However, the Census Bureau revised July from +1.9% to plus 1.4%. Thus, the net reading vs. the original July report is actually -0.3%.
However, details are constructive for future investment.
Throw out the headline and look at capital goods. Factory orders in August edged only 0.2 percent higher but core capital good orders (nondefense ex-aircraft) jumped 0.9 percent following very impressive gains of 0.8 percent and 0.5 percent in the prior two months. These results point to a rebound for business investment which otherwise has been depressed this year.
But the new orders for capital goods will take time to fill and in the meantime business is slow as shipments of core capital goods slipped 0.1 percent following a July dip of 0.7 percent. These two readings will hold down nonresidential investment in the third-quarter GDP report, but that’s pretty much ancient history.
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