Get Ready For A Startling Durable Goods Report On Tuesday
Expectations are for the headline reading to show orders grew 8%, according to data from Bloomberg.
But according to Wall Street economists, that number could be as high as 38%.
The reason? A massive number of planes were ordered in July.
"Swings in aircraft orders are the key driver of short-term volatility in the headline durable goods number via their impact on the transportation component," writes Ian Shepherdson at Pantheon Macroeconomics. Shepherdson notes that Boeing recorded orders for 324 aircraft in July, up from 109 in June. Despite this large increase in orders, Shepherdson sees the headline durable goods index growing 6%.
In a note to clients, Brian Jones at Societe Generale said he expects durable goods bookings jumped 24.5% in July, which would be a new all-time record for the index, topping the 16.6% jump recorded in June 2000.
Ethan Harris at Bank of America Merrill Lynch expects durable goods orders climbed 18.5% on the back of what he calls, "a sensational gain in aircraft orders." Harris noted that a huge number of orders from the London Farnborough air show in July drove the surge in orders, though a number of these orders are for models that are still under development and so shipments won't arrive for several years.
Paul Dales at Capital Economics sees durable good orders surging by 30% in July, but like Harris notes that these orders won't be complete until the end of the decade, and won't boost GDP until then, either.
Of Wall Street economists followed by Business Insider, Michael Gapen at Barclays has the lowest estimate for durable goods, expecting a 0.5% increase in July, writing in a note to clients that he expects, "modest gains in the aircraft and vehicles components" of the report.
Last week, we highlighted this chart from Societe Generale, which showed what the expected increase in durable goods orders could look like.
The report is due out at 8:30 am ET on Tuesday.
