US growth holds at 1.5 per cent as durable-goods orders rise
The second estimate left annualized US growth at 1.5 per cent in the second quarter. Higher imports offset an upward revision to consumer spending, while July durable-goods orders rose 1.1 per cent. A rebound in transportation equipment supported the move; the smaller 0.4 per cent gain excluding transportation limits how broadly the manufacturing-demand improvement can be read.
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The growth estimate held
The US Bureau of Economic Analysis said real GDP grew at an annualized 1.5 per cent in April through June, leaving the advance estimate unchanged. Growth had been 2.1 per cent in the first quarter. Consumer spending, exports and investment added to output while government spending fell; a larger rise in imports offset an upward revision to consumer spending. Profits from current production also increased 400.9 billion dollars in the second quarter, after a 74.4 billion dollars increase in the first.[1]
Transportation led the orders rebound
The US Census Bureau's advance data showed durable-goods orders rising 3.6 billion dollars, or 1.1 per cent, to 339.3 billion dollars in July. Orders have now increased in four of the past five months. After two monthly declines, transportation-equipment orders led the move with a 2.6 billion dollars, or 2.3 per cent, gain to 116.2 billion dollars. Orders excluding transportation rose 0.4 per cent, while the measure excluding defence increased 1.3 per cent, leaving a more measured base beneath the headline rate.[2]
Domestic demand is firmer than the headline
The composition points to a firmer private-demand core than the 1.5 per cent headline suggests: real final sales to private domestic purchasers increased 4.2 per cent in the second quarter. Yet the slowdown from 2.1 per cent growth in the first quarter reflected weaker momentum in investment and exports as well as lower government spending. Transportation's large contribution to July orders, and the advance nature of the factory data, also argue for caution in treating the manufacturing turn as broad-based.[1], [2]
