By Greg Robb, MarketWatch
AFP via Getty Images
The numbers: Orders for durable goods rose 0.4% in August, the fourth straight gain but a more modest increase after three straight strong gains, the government said Friday.
Economists had forecast a 1.5% increase in orders for durable goods in August. Orders were raised to 11.7% in July and 7.7% in June.
What happened: Machinery orders led the gain in August, rising 1.5%.
Stripping out planes and cars, orders also rose 0.4% in August. Transportation often exaggerates the ups and downs in orders because of lumpy demand from one month to the next.
Orders for motor vehicles and parts fell 4% in August after a 21.7% gain in the prior month.
Orders excluding defense goods rose 0.7% after a 10.4% gain in July.
Core capital goods rose 1.8% in August after a 2.5% rise in the prior month. This category has now risen above pre-COVID trend. Shipments of this crucial sector rose 1.5%.
Big picture: Manufacturing has rebounded well from the shutdown due to the pandemic. Chicago Fed President Charles Evans said manufacturing firms have some advantages because they have an engineering environment and know how to keep people safe.
What are they saying? “The muted 0.4% rise in orders last month signals the boost from reopenings and fiscal aid has faded and that activity is now more closely aligned with the soft pace of underlying economic activity that has lost significant momentum since the initial stages of the recovery,” said Oren Klachkin, lead U.S economist at Oxford Economics.
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.68% opened lower Friday with the index in danger of logging a fourth consecutive weekly loss.