By Walter Kurtz, Sober Look
A massive monthly decline in US durable goods orders in August once again demonstrated the vulnerability of the US manufacturing sector. The 13% MoM drop is only rivaled by declines during the 08-09 crisis. Granted, a large portion of this was driven by aircraft orders, but it is worrying nevertheless.
US Durable Goods New Orders Industries MoM SA
This release, combined with other poor economic numbers from today have sent the Citi Economic Surprise Index sharply lower.
Citi Economic Surprise Index
Here is a good recap of today’s data. One surprise came from lower than expected GDP, which was in part caused by the North American drought.
— Companies cut orders for long-lasting goods by 13.2 percent in August, the Commerce Department said. That was the biggest drop in more than three years but it was largely influenced by a 102 percent decline in volatile aircraft orders. Excluding transportation equipment, orders fell only 1.6 percent. And in a positive sign, orders in a category that reflect business investment plans rose 1.1 percent, the first increase since May.
— The overall economy grew at a 1.3 percent annual rate in the April-June quarter, much lower than the 1.7 percent the government previously estimated. About half of the downward revision stemmed from the severe drought in the Midwest, which cut overall farm output. But growth also fell because exports and consumer spending expanded at a slower pace.
— The number of Americans who signed contracts to buy previously occupied homes fell in August from a two-year high in July. The National Association of Realtors said its index of sales agreements declined 2.6 percent to 99.2. That’s just below the reading of 100 that is considered healthy. Still, the index is 10.7 percent higher than a year ago.
… Weekly applications for unemployment benefits plunged 26,000 to a seasonally adjusted 359,000, the lowest level in two months, the Labor Department said. The four-week average, a less volatile measure, fell to 374,000.