New orders for long-lasting U.S. manufactured goods fell unexpectedly in June, weighed down by weak receipts for transportation equipment, a government report showed on Wednesday.
JOSHUA SHAPIRO, CHIEF U.S. ECONOMIST, MARIA FIORINI RAMIREZ INC, NEW YORK
The headline is generally not a meaningful number because defense capital goods can be very volatile. If you look at the underlying data for June, it could be pretty great...If you strip out to the volatile categories, it's kind of a soft month.
You're seeing some of the effect of the slowdown in the manufacturing sector. The headline number for this report is not a meaningful number. This doesn't say a lot about what we might see in the future.
DAN DORROW, HEAD OF RESEARCH, FAROS TRADING, STAMFORD, CONNECTICUT
I really focus on the core, which is the non-defense capital goods excluding aircraft. I don't like to interpret too much from one month of a volatile series, but the trend over the last couple of quarters suggests the business sector is intact in terms of gradual expansion. Our view is the United States is going to lag the rest of the world, as growth is going to be export- and investment-driven. This number says that basic trend is intact.
MARK LUSCHINI, CHIEF INVESTMENT STRATEGIST AT JANNEY MONTGOMERY SCOTT IN PHILADELPHIA:
It is indicative of the lingering effects of this soft patch that we've had here recently where businesses remain very cautious with regard to building any kind of stocks in anticipation of increasing final sales.
JOHN CANALLY, ECONOMIST AND INVESTMENT STRATEGIST, LPL FINANCIAL, BOSTON
The headline looks awful but I think beneath the surface there is some decent news not only for the second quarter but for the second half of the year.
The headline is weak but what I look at in this report is non-defense capital goods, excluding aircraft, and they have accelerated over the last three months by nearly 18 percent, and that's a big acceleration from 0.9 percent in the three months ending in March. So I think that's a good sign for future capital spending and future business activity. On the shipments side, which feeds directly into GDP, that was up at a 10 percent annualized rate in the last three months, and that suggests you get another strong quarter for business capital spending in the second quarter.
You were looking for confirmation that the soft spot ended, that was caused by the Japanese earthquake and tsunami and the aftermath, and I think there are some signs of that in this report and we will get further confirmation of that when we get GDP results on Friday.
JEFFREY FRIEDMAN, SENIOR MARKET STRATEGIST AT LIND-WALDOCK IN CHICAGO
In a word: disappointing. It should be a negative, it's kind of a slightly volatile indicator. The situation right now is that it'll have to take a backseat to the deficit and Washington. Believe it or not, markets can't believe politicians are playing this game. Most people believe they'll get it done, so they're not concerned about durable goods. All the economic indicators and earnings are taking a backseat as we look at the deficit.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
June durable goods orders with a 2.1% decline were well short of the +0.3% consensus with the main negatives coming from the volatile aircraft sector, both defense and non-defense. Orders ex-transport give a better guide to the underlying picture and rose by a marginal 0.1%, a little short of a 0.5% consensus. This is consistent with a manufacturing sector that has lost underlying momentum such that it is now barely growing. This puts the durable goods orders data on the weaker side of what has recently been a mixed bag of manufacturing reports.