US: Durable goods orders and Pending home sales in focus – Nomura

Analysts at Nomura expect a 0.2% m-o-m decline in US August core durable goods orders (excluding transportation goods), after a 0.6% increase in July.

Key Quotes

“Our estimates indicate that the production of durable goods excluding transportation equipment fell moderately in August. The new orders index in the ISM survey slipped slightly by 0.1pp to 60.3, which is still an elevated reading. Transportation goods orders may rebound in August following a sharp decline in July. Auto assemblies output rebounded in August from July’s level although its pace remains weak relative to the 2016 average. Moreover, industry data suggest civilian aircraft and parts orders will likely rebound. A sharp decline in US Air Force spending suggests weak defense-related orders, which will likely be offset by rebounds in other transportation orders. Altogether, our forecast for topline durable goods orders is a 0.9% increase.”

“Pending home sales: Pending home sales, which tend to lead existing home sales, have been weak over the past five months. Continuing supply shortages for available homes for sale will likely continue to weigh on pending home sales. However, with new home affordability deteriorating more relative to existing homes, consumers could shift towards more affordable existing homes on the market, adding a gradual tailwind to pending home sales. In addition, strong job gains and steady income growth will continue to support consumer demand in the housing market.”