USDIndex, H4
The 0.4% US August durable goods orders rise undershot estimates, after out-sized gains of 11.7% in July, 7.7% in June and 15.0% in May. Weakness was due to a restrained 0.4% rise in orders ex-transportation, and a lean 0.5% transportation increase. Durable shipments also under-performed, with a -0.3% decline. However, the equipment data sharply beat estimates, with big gains in August after upward July revisions, while inventories fell only -0.1% after a -0.8% decline.
The equipment and inventory data impact GDP, so ActionEconomics have raised their Q3 GDP growth estimate to 31.5% from 31.0%, after an assumed Q2 GDP boost to -31.6% from -31.7%, and still expect 6.5% GDP growth in Q4. The Q3 GDP estimate incorporates a 37% Q3 growth rate for equipment spending, after a -35.9% pace in Q2. Inventories are expected to add $264 bln in Q3, after an estimated -$202.5 bln subtraction in Q2 that leaves a dramatic -$283.4 bln Q2 liquidation rate. They also expect a -0.2% August factory inventory drop given an assumed -0.3% nondurable inventory decline, alongside a 0.1% business inventory rise. Finally they assume a 1.0% August factory orders gain and a 0.6% factory shipments increase, given an assumed 1.6% rise for nondurable goods shipments and orders.
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Stuart Cowell
Head Market Analyst
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