PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Strong Growth on Durable Goods and Investment Through First Half of 2018

By at 26 July, 2018, 11:57 am

Small Business Insider: The Latest Economic Data

 

by Raymond J. Keating-

The U.S. Census Bureau’s June durable goods report pointed to a bounce back in durable goods. After two months of decline, durable goods orders grew at 1.0 percent in June.

The Importance of Durable Goods

Durable goods orders are a leading indicator on the economy, gauging the confidence of both businesses and households to make investments, and offering a look at the direction for manufacturing.

Expectations were for faster growth in June, but the move from negative to positive growth was welcome. For good measure, the expansion was robust when comparing the first six months of 2018 versus the first six months of 2017, with growth in new orders registering 8.4 percent.

It’s also always important to look at the growth in capital goods orders, which are a proxy for general business investment. In June, such orders edged ahead by 0.2 percent, matching the same rate for May. However, capital goods orders growth came in at a very strong 10.1 percent during the first six months of 2018 compared to the same period last year.

And finally, nondefense capital goods excluding aircraft orders serve as a gauge for what private investment in equipment and software will look like in the GDP numbers. This measure was up by 0.6 percent in June, which followed on 0.7 percent in May and 2.0 percent in April. Again, growth through the first six months of this year has been strong, up by 6.8 percent versus the same period last year.

Pro-Growth Policies Making a Difference

With month-to-month variability inevitable, it is worth highlighting the strong growth we’ve seen on the orders and investment fronts through the first six months of 2018. The incentives for business investment clearly were given a boost by the business tax reform and relief measure passed and signed into law in December of last year.

_______

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

News and Media Releases