Ahead of the Bell: US durable goods

AP News
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Posted: Sep 24, 2015 7:28 AM
Ahead of the Bell: US durable goods

WASHINGTON (AP) — The Commerce Department releases its August report on orders for durable goods. The report will be issued at 8:30 a.m. EDT Thursday.

ORDERS DOWN: The expectation is that orders fell 2.2 percent in August, according to a survey of economists by data firm FactSet.

MANUFACTURING DEMAND: In July, orders to U.S. factories for long-lasting manufactured goods rose 2.2 percent. It was the second consecutive monthly gain. And demand in a key category that tracks business investment plans jumped by 2.1 percent, the largest amount in 13 months.

The big increase in July followed by an expected sharp decline in August will likely reflect the volatility in demand for commercial aircraft. Data points to a big decline in August for aircraft.

But the underlying demand for manufactured goods has been weaker this year as a strong dollar and China's economic slowdown have dragged down demand for American exports.

The Institute for Supply Management reported that its manufacturing index slid to a reading of 51.1 in August, its lowest level since May 2013. It was the second straight drop for the manufacturing index. Anything above 50 signals growth.

The rising dollar makes U.S. goods more expensive in foreign markets while weakness in China, the world's second biggest economy, also serves as a drag on the global economy.

The overall economy, as measured by the gross domestic product, grew at an annual rate of 3.7 percent in the April-June quarter, an estimate that will be revised on Friday. Private economists believe the GDP estimate for the second quarter will be unchanged at 3.7 percent, which represented a sharp increase after an anemic 0.6 percent increase in the first quarter.

Economists are forecasting that growth in the current July-September quarter will slow slightly to around 2.5 percent, reflecting in part an effort by businesses to trim their stockpiles after a big rise in inventories in the spring.