Wednesday, July 27, 2005

Durable Goods Orders Strong, New Home Sales Hit Another Record, Distillate Inventories Rise Again

- Durable Goods Orders for June rose 1.4% versus estimates of a 1.0% decline and an upwardly revised 6.4% increase in May.
- Durables Ex Transportation for June rose 2.6% versus estimates of a 1.0% gain and an upwardly revised .9% increase in May.
- New Home Sales for June rose to 1374K versus estimates of 1300K and 1321K in May.
- The EIA reported that crude oil inventories fell 2.25 million barrels vs. estimates of a 2.75 million barrel decline. Gasoline inventories fell 2.13 million barrels vs. estimates of a 700K barrel fall. Distillate inventories rose 3.14 million barrels vs. estimates of a 2.0 million barrel rise.

BOTTOM LINE: US durable goods orders rose in June after soaring the most in three years the prior month. Factories received more orders for defense equipment, computers and machinery. Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, rose a brisk 3.8% last month, Bloomberg reported. This bodes well for future gauges of manufacturing activity.

Americans bought new homes at a historically strong pace last month as low mortgage rates and job growth made housing affordable. The median price fell 5.5% to $214,000, the lowest since September, reflecting a greater proportion of sales of less expensive homes. The biggest gains were for houses in the $150,000 to $199,999 range and declines for more expensive models. Sales rose 5.1% in the South, 2.8% in the West, 2.1% in the Midwest and 7.2% in the Northeast. The supply of homes for sale at the current pace fell to 4 months in June from 4.1 months the prior month. It is a positive to see more participation by families of lower income levels in the strong housing market.

Crude oil is not-reacting to relatively bearish inventory numbers for the commodity.

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