21 November 2019

Durable Goods Orders Plunge In July

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July durable goods orders recorded their biggest fall in nearly a year giving economists reason for concern about the health of the economy.

The Commerce Department reported a decline in durable goods orders of 7.3 percent in July, the biggest drop in nearly a year and much larger than economists’ expectations of a 4.0 percent decline. The July drop snapped a three-month streak of gains and is the largest drop since August of 2012.

Orders for non-defense capital goods excluding aircraft is an indicator of business spending and fell in July as well, stopping a four-month run of gains. Its fall of 3.3 percent was the largest decline since February.

The decline in orders for both durable and capital goods are an indication that manufacturing will slow and not bounce back as quickly as many economists projected. When the slowdown in residential construction is factored in, it is likely the economy will not grow much from the 1.7 percent annualized pace in second quarter.

 

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