July Capital Good Shipments

Aug 24, 2007 – Real U.S. shipments of non-defense capital goods excluding aircraft rose by 0.5% in July after falling by 1.1% in June (Chart 1). Reflecting that large June decline, the average gain in these shipments was just about zero for the three months through July.

Chart 1. Real shipments of non-defense capital goods ex aircraft. Percent change. January 2004 through July 2007.

Real non-defense capital good shipments excluding aircraft fell by 3.2% in July, compared to the same month last year (Chart 2). This twelve-month trend has been negative since the start of this year.

Chart 2. Real shipments of non-defense capital goods ex aircraft. Year-ago percent change. January 1969 through July 2007.

Real non-defense capital good shipments excluding aircraft rose at a 1.7% annual rate in July, compared to their Q2 average (Chart 3). For all of Q2, these shipments rose by 7.8%.

Chart 3. Real shipments of non-defense capital goods ex aircraft. Annualized percent change. Q1 2000 through Q2 2007 and Q3 to date.

In the quarterly GDP accounts, real business fixed investment in equipment & software rose at a 2.3% annual rate in Q2. These data would be consistent with near-zero growth in Q3.

Bottom line: looks like a slow start for businesses’ real equipment & software purchases in the first month of Q3.

Suzanne Rizzo

Sources:

• U.S. Department of Commerce, U.S. Census Bureau (http://www.census.gov) - manufacturers’ shipments of non-defense capital goods excluding aircraft.
• U.S. Department of Labor, Bureau of Labor Statistics (http://www.bls.gov) - the Producer Price Index (PPI) for finished capital goods (used to calculate real shipments).
• U.S. Department of Commerce, Bureau of Economic Analysis (http://www.bea.gov) - real fixed investment in business equipment & software, GDP.
• National Bureau of Economic Research (http://www.nber.org) - recession dates.