When you see a blowout in durable goods, you usually have to get the reminder that the number is one of the most volatile of all economic releases and can be wildly up or down, regardless of the general economic trends. That being said, durable goods came in with a gain of 4.2% for the month of June. Dow Jones was calling for a gain of only 1.7% on the headline number and Bloomberg’s consensus estimate was even lower at a gain of 1.5% expected.

Where the headline gets scratched out is that, on an ex-Transportation basis, the report is only 0.0%. Bloomberg was expecting that this would be up by 0.6%. If you back out the defense orders, the gain jumps back up to 3.0% for June.

Another boost comes from a revision in May. The headline durable goods figure was raised to a gain of 5.2% from 3.7%, and the ex-Transportation durable goods was raised to 1.0% from 0.7% for May.

The durable goods report is so volatile each month because it is comprised only of the big-ticket sales items, and it reflects orders from the consumer and from businesses. These orders are measured by those placed with domestic manufacturers for immediate and future delivery of factory hard goods, and they tend to have a usable life of three years or longer.

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