June Durable Goods Likely Saved Second-Quarter GDP

Durable goods rose by 0.7% in the month of June for the headline report. Bloomberg had the consensus report as a gain of 0.5%. May was down 0.9% and April was up 0.8%.

The ex-transportation durable goods report also beat estimates at 0.8%, versus the 0.7% consensus estimate from Bloomberg. This was effectively flat in May and up by 0.4% in April.

A key measurement in this Commerce Department report is the business spending climate report, via the orders for nondefense capital goods, ex-aircraft. This measurement often removes the wild parts of the durable goods report, and it aims to show the true underlying broad base of business spending, it rose by 1.4% in June, after being negative in May and April.

The fear going into this durable goods report was that it would hurt second-quarter GDP estimates. That does not appear to be the case, and that first-quarter GDP reading of -2.9% now looks as though it will have been a one-time blip in the recovery that is nearing five years old.

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