August’s durable goods and new home sales

There were just two widely watched economic reports released last week: the August advance report on durable goods and the August report on new home sales, both from the Census bureau…meanwhile, the week also saw the release of the Chicago Fed National Activity Index (CFNAI) for August, a weighted composite index of 85 different economic metrics, which fell to to –0.04 in August from +0.08 in July, after the July index was revised up from –0.08 to +0.08; that left the more often cited 3 month moving average of the index at +0.01 in August, up from a revised –0.01 in July, with those figures for both months so close to zero that both would indicate that national economic activity has been near the historical trend over the summer months..

The week also saw the release of two more regional Fed manufacturing surveys for September: the Kansas City Fed manufacturing survey, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index rose to +14 in September, up from +10 in August and +9 in July, meaning a larger plurality of that region’s manufacturers reported improving business metrics this month than during the prior two, while the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index fell to −2 in September from +4 in August and from +5 in July, which means that a small plurality of that region’s manufacturers reported deteriorating business metrics during September, after a small plurality had reported improvement during the prior two months…

August Durable Goods: New Orders Fell < 0.1%, Shipments Fell 0.2%, Inventories Rose 0.5%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for August (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods decreased by $0.1 billion to $338.6 billion, the first decrease in three months, following a 0.9% increase to $338.7 billion in July, which was revised from the 1.1% increase to $339.3 billion reported for July’s new durables orders a month ago….after an 8.5% jump in the value of April’s orders, new orders are now running 7.7% above those of a year ago, up a bit from the 7.6% year-to date increase we saw in this report last month…

As is usually the case, the volatile monthly change in the value of new orders for transportation equipment drove this month’s headline decrease, as the value of new transportation equipment orders fell $0.7 billion or 0.6 percent to $114.1 billion, on a 4.3% decrease to $18,825 million in new orders for commercial aircraft and a 0.6% decrease to $73,347 million in new orders for motor vehicles and parts….excluding new orders for transportation equipment, other new orders were up 0.3% in August, while new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment, rose 1.6% to $87,629 million, after rising 0.6% in July…

Meanwhile, the seasonally adjusted value of August’s shipments of durable goods, which will be inputs into various components of 3rd quarter GDP after adjusting for changes in prices, fell for the first time in nine months, decreasing by $0.7 billion or 0.2 percent to $333.8 billion, after the value of July’s shipments was revised from $334.7 billion to $334.56 million, thus revising the previously reported 1.0% increase in July shipments to a 0.9% increase from June….a decrease of $2.0 billion or 1.8 percent to $109.5 billion in the value of shipments of transportation equipment led the August decrease, as the value of shipments of commercial aircraft fell 8.6% to $16,267 million, and the value of shipments of motor vehicles and parts fell 0.7% to $73,240 million…on the other hand, the value of shipments of durable goods other than transportation equipment rose 0.6% to $224,360 million, led by a 1.5% jump in shipments of computers and related products… As a result, the value of shipments of nondefense capital goods excluding aircraft rose 0.6% to $84,998 in August, after rising 1.4% in July, changes that will be reflected in 3rd quarter GDP equipment investment figures, after adjusting for changes in prices since the 2nd quarter ….

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the eleventh  consecutive month, increasing by $3.0 billion or 0.5 percent to $608.1 billion, after the value of July’s inventories was revised from $604.4 billion to $605.054 billion, which was still a 0.5% increase from June…a $1.1 billion or 0.6 percent increase to $192.7 billion in the value of inventories of transportation equipment led the August inventory increase, while the value of inventories of other than transportation equipment rose 0.5% to $415.4 billion….

Finally, the value of unfilled orders for manufactured durable goods, which is probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the twenty-fifth time in twenty-six months, increasing by $9.8 billion or 0.6 percent to $1,609.4 billion, after the value of July’s unfilled orders was revised from the $1,599.9 billion reported last month to $1,599.6 billion, which is still a 0.6% increase from June…a $4.7 billion or 0.5 percent increase to $1,009.8 billion in the value of unfilled orders for transportation equipment led the August increase, while unfilled orders other than those for transportation equipment were 0.9% higher at $599.6 billion…compared to a year earlier, the unfilled order book for durable goods is now 8.8% above the level of last August, as the value of unfilled orders for transportation equipment is 9.8% above its year ago level, on a 11.9% increase in the value of the backlog of orders for defense aircraft and a 9.9% increase in the value of the backlog of orders for civilian aircraft and parts…

August New Home Sales Highest in 8 Months; Average Sales Price Lowest in Two Years

The Census report on New Residential Sales for August (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 684,000 new homes a year, which was 6.4 percent (±19.5 percent)* above the revised July rate of 643,000 new home sales a year, but was 2.0 percent (±15.7 percent)* below the estimated annual rate that new homes were selling at in August of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether August new home sales rose or fell from July, or even from those of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….hence, these initial new home sales reports are not very reliable and often see significant revisions… with this report, sales new single family homes in July were revised from the annual rate of 678,000 reported last month down to a 643,000 annual rate, while home sales in June, initially reported at an annual rate of 628,000 and revised to a 678,000 a year rate last month, were revised to a 672,000 a year rate with this report, and while May’s annualized home sale rate, initially reported at a 580,000 rate and revised from a 618,000 to a 630,000 rate last month, were revised up to a 636,000 rate with this release…

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 57,000 new single family homes sold in August, up from the estimated 53,000 new homes that sold in July but down from the 58,000 that sold in June….the raw figures from Census field agents further allowed for estimates that the median sales price of new houses sold in August was $393,700, up from the estimated median sales price of $392,200 in July, but down from the median sales price of $417,900 in August a year ago, and that the average August new home sales price was at a two  year low of $478,700, down from the $526,400 average sales price in July, and down from the average sales price of $525,100 average in August a year ago….a seasonally adjusted estimate of 483,000 new single family houses remained for sale at the end of August, which represents a 8.5 month supply at the August sales rate, down from the revised 9.0 month supply of unsold homes in July, which was originally reported as a 9.6 month supply…. 

(the above is the synopsis that accompanied my regular Sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are chosen from the aforementioned GGO posts, contact me…)