Rover's Weekly Market Brief — 7/26/2019


DJIA: 27,192.00 (+0.14%)

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New orders for durable goods were up an unexpectedly high +2.0% in June after drops of -2.8% in April and a downwardly revised -2.3% drop in May. The increase was led by a +75.5% ($2.68 billion) increase in civilian aircraft orders, but defense aircraft orders fell by -32.1% ($1.36 billion), which limited the overall monthly gain in transportation orders to +3.1%. Core capital goods, which exclude transportation and defense and serve as a gauge for business production investment, were up +1.9% after a +0.3% gain in May and a -1.1% drop in April. On a yearly basis, new orders were flat, but a -42.1% drop in civilian aircraft orders dragged down overall transportation orders to -2.2% for the year, and excluding transportation brought yearly new orders to +1.1%.

Imports fell by -$4.625 billion in June, but the drop’s effect on the goods trade deficit was limited by a -$3.748 billion drop in exports, bringing the deficit down by $878 million. The steepest export drop was a -10.9% drop for consumer goods, followed by a -4.0% drop in motor vehicles and a -3.4% drop in other (e.g. military) goods. Imports fell the most for industrial supplies (-7.4%), which includes petroleum, motor vehicles (-1.9%), and consumer goods (-1.7%). Exports of foods (+0.5%) and industrial supplies (+0.2%) increased, while the only import category to increase for the month was other goods (+9.2%).

The first estimate of GDP growth for the second quarter of 2019 was 2.1%, down from 3.1% in the first quarter. Consumer expenditures grew at a higher than expected +4.3%, up from +1.1% in Q1, and contributed 2.85 points to GDP, with government expenditures adding in 0.85 points after a +5.0% increase in spending. However, these positive contributions were countered by drops for gross private domestic investment (-1.0 points), lowered inventory (-0.86 points), a drop in exports (-0.63 points), and an increase in imports (-0.01 points). Inflation adjusted after tax income rose +2.5% vs. +4.4% in Q1, and the personal savings rate dropped from 8.5% to 8.1%. Consumer inflation jumped to +2.3% vs 0.4% with core inflation, which excludes food and energy costs, up +1.8% vs +1.1%.

Upcoming Economic Reports:

Wednesday July 31 – FOMC Meeting Announcement

Friday August 2 – Employment Situation

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