New orders for durable goods were not all that durable in August. The only good news here is that the drop was not as bad as economists had expected prior to the release. Recall that the monthly report on durable goods is generally considered to be a very volatile report — and it can be very misleading on a monthly reporting basis.

New orders for manufactured durable goods in August fell by $4.8 billion, or 2.0%, to $236.3 billion. Bloomberg had published an economic consensus reading of -2.0%, and Dow Jones (Wall Street Journal) had its consensus expectation at -2.5%.

Keep in mind that this decrease followed two consecutive monthly increases. It was also the month that equities finally broke down due to all the negative news coming out of China. The prior report for July was for a 1.9% increase, down from the preliminary report of a 2.0% gain.

New orders on an ex-transportation basis were down by less than $100 million, so they were virtually unchanged. Excluding defense orders, that figure on new orders was down by some $2.2 billion, for a drop of about 1.0%. Transportation equipment had previously seen two large consecutive gains, and this was shown to be the leader of the drop in August — down $4.8 billion (-5.8%) to $78.7 billion.

Total shipments were flat in August after solid gains in July and June. The core capital goods segment were down 0.2%. Factories were keeping inventories more or less flat, working off backlog orders with a 0.2% drop.

Thursday’s durable goods report for August was for the middle month of third quarter. Neither this number nor the July revision should be enough to make any sizable changes to third-quarter estimates on gross domestic product.

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