U.S. headline durable goods orders likely to have dropped in July on fall in aircraft orders

U.S. durable goods orders data for the month of July is set to be released tomorrow. According to a Wells Fargo research report, the durable goods orders are expected to have fallen in July. In the prior month, the durable goods orders had risen 0.8 percent. However, stripping the volatile transportation sector orders had risen 0.2 percent. Moreover, the durable goods orders excluding transportation were upwardly revised to a 0.3 percent rise. Overall, a further indication of a modest growth is seen in the factory sector.

Equipment spending had added 0.2 percentage points to the strong 4.1 percent annualized rate of GDP growth in the second quarter. This was below the previous five quarters, but remained strong. A larger contribution is expected in the third quarter given a rebound in core capital goods orders in the past several months, which is expected to have continued in July.

“We are calling for 0.4 percent growth in durable goods orders ex-transportation in July. However, we expect a decline in aircraft orders to weigh on headline durable goods orders growth”, added Wells Fargo.

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