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Largely due a +$3.6 billion (+4.9%) increase in new orders for transportation equipment, new orders for all durable goods were up +1.7% for August. The increase in transportation orders was primarily made up of a +$3.3 billion (+44.8%) increase for civilian aircraft and a $0.8 billion (+1.5%) increase for automotives, but was held back by a -$1.3 billion (-24.3%) drop in defense aircraft orders. The new orders rate has been heavily influenced by volatile swings in civilian aircraft orders in recent months, but the rate for core capital goods, which exclude both transportation and defense and serves as a measure of business investment, has been more stable and was +0.9 for the month, and +3.6% Y/Y. July’s core capital new orders rate was revised upwards from +0.4% to +1.1% M/M, and from +3.5% to +4.1% Y/Y.
Based on upward revisions for inventory investment and consumer spending on services which were partially offset by downward revisions for consumer spending on goods, the third estimate of 2017 Q2 GDP ticked up +0.1% to an annualized +3.1%, its fastest rate since 2015 Q1. Combined with Q1’s +1.2% growth, GDP for the first half of 2017 grew at a +2.1% rate. In Q2, the major contributors to GDP were consumer spending (+3.3%) and nonresidential fixed investment (+6.7%), which were offset by drops in government purchases (-0.2%) and residential fixed investment (-7.3%). Corporate profits, after taxes with inventory valuation and capital consumption adjustments, were revised downward to +0.1% from the previously estimated +0.8%.
Personal income rose +0.2% in August, and both disposable personal income (DPI) and personal consumption expenditures (PCE) rose +0.1%. However, adjusting for inflation brought both DPI and PCE to -0.1% drops for the month, with inflation adjusted PCE dropping for the first time since January. The PCE price index was up +0.2% M/M, and +1.4% Y/Y, but the core PCE index, which eliminates the volatile food and energy components and is the preferred inflation measure for the Federal Open Market Committee (FOMC), was up +0.1% M/M and +1.3% Y/Y. This yearly core PCE reading is down -0.1% from the previous month’s +1.4% rate, and moving further away from the FOMC’s +2.0% target, which lessens the likelihood of another rate increase by the FOMC this year.
Monday October 2 – Institute for Supply Management (ISM) Manufacturing Index
Friday October 6 – September Employment Situation