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Parsing Capital Goods Orders


Economists have been waiting for the economic data to become misleading due to the impact of our terrible hurricane season.  Fortunately, the monthly “durables report” helps separate the one-time data from the more durable.  It is one of the more important monthly reports.

Overall, capital goods order rose another 2.2% in September, following a 2.0% jump the previous month.  That is a very strong increase, with stronger than expected growth in civilian aircraft sales and weaker than expected growth in auto sales, despite the hurricane damage to cars.  Stripping out defense spending and civilian aircraft sales, the rate of growth drops to a still very robust 1.3% monthly increase in capital goods orders.  Over the last quarter, this has risen at a very strong 11.3% annualized rate.

Bottom Line:  the one-time impact of the hurricanes has been less than expected and has not yet confused the economic data.  More importantly, the underlying data continues to look strong.

Party on, Garth!

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