–Ex Defense +5.7%; Civ Aircrft Ordrs +53.9% as Boeing Continues to Gain

By Joseph Plocek

WASHINGTON (MNI) – The July durable goods data showed aircraft
again boosting the totals. This left us to ponder whether to call three
months of rising orders a good trend or to note that most industries are
not doing well, as illustrated in the fact that orders excluding
transportation are now lower in four of the last five months, probably
because of on-going defense pull-backs.

July durable goods orders printed +4.2%, but the change was -0.4%
ex transportation and +5.7% ex defense (a rebound). This mixed report
overall was about as expected and shows growth but not too much
strength.

Boeing Corp. reported 260 new orders in July after 24 in June and
nondefense aircraft orders printed +53.9%. The only surprise here was
that the Commerce Department picked up only +78.5% new aircraft orders
before adjustment. (The July 2011 seasonal adjustment for aircraft
orders added to the gain.)

More recently, Boeing Corp. has seen cancellations – Qantas, Cathay
Pacific, and Singapore Airlines are among the carriers that have pulled
back. These cancelled orders might have been incorporated, or lesser
manufacturers might not have done as well, lowering the count.

Also in transportation, motor vehicles printed +12.8%. So overall
transport was +14.1%. Nondefense capital goods orders ex aircraft were
-3.4%.

Other orders components were mixed: primary metals orders posted
+2.7%, machinery -3.6%, computers & related electronics +1.0%
(computers alone +3.7% but communications equipment -3.7% showing
divergence even within the large sectors), and electronics -2.1%.

Total shipments were up +2.6%, their biggest gain since December
2011. Inventories printed +0.7%, their best gain since January. These
suggest production has not really ramped back in the event most orders
are actually weakening.

Nondefense capital goods shipments gained 1.2%, suggesting business
capital spending advanced at the start of Q3.

**MNI Washington Bureau: (202)371-2121**

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