September 2014 Currency Exchange Rates

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In September the monthly average value of the U.S. dollar again appreciated against all three major currencies we track: 0.6 percent against Canada’s loonie, 3.1 percent relative to the euro, and 4.1 percent against the yen. On a trade-weighted index basis, the dollar strengthened by 1.4 percent against a basket of 26 currencies. 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

July 2014 International Trade (Pulp, Paper & Paperboard)

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July's results essentially extended 2Q’s trend in pulp and paper trade: stronger domestic demand but generally weak global demand. Although July exports did tick higher, it barely did so, registering a scant 0.1 percent increase while showing the first increase in imports since April. Imports broke out of their recent trading range between 800,000 and 815,000 tonnes, posting a 15.9 percent increase over June's level. Sharply higher imports and barely higher exports yielded a decline in net exports, dropping by 7.8 percent on month-to-month basis ("M2M"), a year-over-year ("Y2Y") decline of 10.9 percent, and YTD decline of 3.0 percent.

The six-month export trend swapped from marginally negative to marginally positive, switching from a 1.6 percent January-to-June decline to a 1.5 percent February-to-July increase. The six-month trend on imports exploded higher, jumping from a 3.8 percent trend increase between January and June to a 17.4 percent increase between February and July. Despite the export trend shifting from negative to positive, the much higher trend on imports means the six-month net-export trend fell, dropping from -4.2 percent from January to June to -5.9 percent from February to July. 

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In terms of notable shifts in country-level details: Pulp exports (15.422 million tonnes YTD) increased by 0.3 percent compared to prior YTD levels. China remains the chief destination of U.S. pulp by a wide margin, representing 56 percent of YTD shipments compared to Mexico, the second-ranked destination at 7.3 percent. Nevertheless China's exports have declined by 2.2 percent YTD compared to the same period in 2013. Mexico's receipt of U.S. pulp export are up nearly 10 percent YTD and India's, the third ranked destination for U.S. pulp exports, are up by nearly 22 percent. Among 2013's top 10 destinations, the most significant change is Indonesia where U.S. pulp exports are over 41 percent higher than prior YTD levels, causing it to jump from the ninth-ranked 2013 YTD destination to the sixth-ranked 2014 YTD destination.

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Paper and paperboard exports (1.422 million tonnes) dropped by 7.0 percent on a YTD basis. Among 2013's Top 10 destinations, the "loss leader" is India (70,000 tonnes, -46.8 percent from prior YTD) followed by China (13,000 tonnes, -32.7 percent), Mexico (24,000 tonnes, -7.1 percent), and Japan (10,000 tonnes, -9.1 percent). Bucking the general decline in paper and paperboard exports, YTD paper and paperboard exports to Canada are up by 57,000 tonnes (+17.9 percent) compared to prior YTD levels. Costa Rica, Guatemala, and Peru are also receiving higher levels of U.S. paper and paperboard exports; Costa Rica's YTD receipts are up by nearly 16,000 tonnes (+48.1 percent), Guatemala is up nearly 6,000 tonnes (+18.5 percent) and Peru is up over 4,000 tonnes (+44.7 percent). 

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Pulp imports (3.729 million tonnes YTD) increased 2.5 percent compared to prior YTD levels. The most significant drop is from Brazil, which has fallen by 1.9 percent. However, imports from Canada, up by 2.0 percent YTD compared to prior year levels, overwhelms Brazil's reduction. Canada and Brazil, the 1st and 2nd ranked pulp import sources, respectively, account for over 94 percent of the pulp imported. Chile, while maintaining its number three rank, has nearly doubled its imports YTD. As a supply source, Indonesia has climbed from being the twelfth-ranked supplier during the first seven months of 2013 to the ninth-ranked supplier during the first seven months of 2014, posting a YTD increase of nearly 66 percent. 

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Paper and paperboard imports (1.762 million tonnes YTD) have expanded by over 10 percent year-to-date compared to prior YTD activity. Once again Canada leads the way, accounting for nearly 79 percent of the YTD increase (149,000 tonnes). Canada is by far the most significant source of imported paper and paperboard in 2014, accounting for 89 percent of all paper and paperboard imported. One notable development on a percentage basis is Australia, which has vaulted from being the 29th ranked supplier during the first seven months of 2013 to the 8th ranked supplier during the first seven months of 2014, posting an eye-popping increase over 63,600 percent -- from 13 tonnes to 8,472 tonnes.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2014 U.S. Home Sales, Inventory and Prices

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Sales of new single-family homes in August rose by 77,000 units (18.0 percent) relative to the previous month, to a seasonally adjusted and annualized rate (SAAR) of 504,000. Sales in August were 32.3 percent above year-earlier levels. Meanwhile, the median price of new homes sold fell (by $4,500 or -1.6 percent) to $275,600. Because single-family starts decreased while sales rose, the three-month average ratio of starts to sales dropped to 1.41. Click here for our post on August’s housing permits, starts and completions. 

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Single-unit completions fell by 53,000 units (-8.2 percent) in August. Nonetheless, new-home inventory expanded in absolute terms (+2,000 units) but shrank in months-of-inventory terms (-0.8 month). 

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Existing home sales retreated in August, by 90,000 units (-1.8 percent) to 5.05 million units (SAAR). With sales of new homes rising but existing homes falling, the share of total sales comprised of new homes jumped to 9.1 percent. The median price of previously owned homes sold in August dropped again (by $1,800 or -0.8 percent) to $219,800. Inventory of existing homes inched lower in absolute terms (-40,000 units) but was unchanged in months-of-inventory terms. 

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Housing affordability nudged down again in July, to its lowest level since November 2008, because the median price of existing homes for sale rose by $900 to $223,900. Concurrently, Standard & Poor’s reported that the newly published U.S. National Index in the S&P/Case-Shiller Home Price indices posted a not-seasonally adjusted monthly change of +0.5 percent in July (+5.6 percent relative to a year earlier).

“The broad-based deceleration in home prices continued in the most recent data,” said David Blitzer, Chair of the Index Committee at S&P Dow Jones Indices. “However, home prices continue to rise at two to three times the rate of inflation. The slower pace of home price appreciation is consistent with most of the other housing data on housing starts and home sales. The rise in August new home sales -- which are not covered by the S&P/Case-Shiller indices -- is a welcome exception to recent trends.

“While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years. The National Index rose 0.5%, its seventh consecutive increase. At the bottom was San Francisco with its first decline this year and the only city in the red. New York tended to underperform over the past few years but it was on top for the last two months.” 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

2Q2014 Gross Domestic Product: Third (Final) Estimate

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According to the Bureau of Economic Analysis' (BEA) “final” estimate, 2Q2014 growth in real U.S. gross domestic product (GDP) expanded at a seasonally adjusted and annualized rate of 4.6 percent. The revised 2Q rate of expansion is 0.6 percentage point greater than the initial (“advance”) estimate, and 6.7 percentage points above 1Q’s -2.1 percent contraction. This is the best positive quarter-to-quarter improvement in GDP growth since 2Q2000, and the second best since the 2Q1982. Three of the four categories -- personal consumption expenditures (PCE), private domestic investment (PDI), and government consumption expenditures (GCE) -- contributed to 2Q growth; net exports (NetX) subtracted from growth.

The positive revisions to 2Q's growth contributions were in:

• Commercial fixed investments (+0.20 percentage point relative to the previous or “preliminary” 2Q estimate);
• Exports (+0.12 percentage point);
• Consumer expenditures (+0.05 percentage point);
• Governmental expenditures (+0.04 percentage point); and
• Inventories (+0.03 percentage point).

The only downward revision was to imports (-0.03 percentage point).

Growth in real final sales of domestic product, the BEA’s “bottom line” indicator of economic health (which excludes the ever-volatile inventories) improved by about a half percentage point, to +3.17 percent.

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For this report the BEA assumed annualized net aggregate inflation of 2.15 percent. By comparison, the growth rate of the Bureau of Labor Statistics’ concurrent seasonally adjusted CPI-U index was 3.53 percent (annualized); meanwhile, the price index reported by the Billion Prices Project (BPP) was 2.72 percent. Were the BEA’s nominal estimates corrected for inflation using the CPI-U, 2Q real GDP would have grown by 3.3 percent; if using the BPP inflation rate, growth would have been 4.1 percent.

Taken at “face value,” this report strengthens the Federal Reserve’s hand for completing its quantitative easing “taper” in October. We caution against a face-value reading, though, for the following reasons:

• Consumer spending reportedly provided a little more than one-third of the headline growth; but, real per-capita disposable income has grown by only 2 percent in aggregate since 2008 (or just 0.37 percent per year). Other BEA reports show household spending remains constrained; moreover, the current savings rate suggests most consumers continue to be skeptical about the veracity and sustainability of this recovery.
• Inventories tend to be “mean reverting.” I.e., 2Q’s inventory growth was essentially the flip side of 1Q’s contraction in what is (over the long haul) a largely zero-sum outcome.
• Surging exports fly in the face of both softening economic growth among major U.S. trading partners and a strengthening dollar. Exports are likely to take a substantial hit when trade adjusts to the latest exchange rate.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

September 2014 Macro Pulse -- On Your Mark, Get Set, Wait!!

The recent string of upbeat economic releases had market watchers and businesses expecting the Federal Reserve would signal a change in its stance on interest rates. Some of those positive data releases included:

· The Bureau of Economic Analysis tweaked its “preliminary” (i.e., second) estimate of 2Q2014 growth in real U.S. gross domestic product (GDP) up to a seasonally adjusted and annualized rate (SAAR) of 4.2 percent. The revised 2Q rate of expansion is 0.2 percentage point faster than the initial (“advance”) estimate, and 6.3 percentage points above 1Q’s -2.1 percent contraction. This is the largest positive quarter-to-quarter improvement in GDP growth in roughly 14 years.

…

As a result of that positive news, the Bank of America Merrill Lynch Fund (BAML) Manager Survey for September found investors were increasingly expecting the Federal Reserve to raise interest rates in the spring of 2015. …

In the middle of all that good news, however, the August jobs numbers upset the apple cart. 

Click here to read the rest of the September 2014 Macro Pulse recap.

The Macro Pulse blog is a commentary about recent economic developments affecting the forest products industry. The monthly Macro Pulse newsletter summarizes the previous 30 days of commentary available on this website.

August 2014 Residential Permits, Starts and Completions

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Total housing starts retreated in August, to a seasonally adjusted and annualized rate (SAAR) of 956,000 units. That level was 161,000 fewer units (-14.4 percent) than July’s 1.117 million (upwardly revised from the initial estimate of 1.093 million) – which was the fastest rate since November 2007. Ninety percent of the decrease in total starts occurred in the multi-family component (-145,000 units or 31.7 percent); single-family starts fell by 16,000 units (-2.4 percent).

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Unsurprisingly, the year-over-year percentage change in total starts also slowed in August, falling back to 7.0 percent. Single-family starts were 4.1 percent above their year-earlier level; the more volatile multi-family component dropped to 13.8 percent above its August 2013 level. 

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Completions increased by 28,000 units (3.2 percent) in August, to 892,000 units SAAR. All of the increase occurred in the multi-family component (+81,000 units or 36.8 percent) as the single-family component decreased (-53,000 units or 8.2 percent). Total completions were 19.8 percent above their year-earlier level. 

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Total permits decreased by 59,000 units (-5.6 percent), to 998,000 SAAR in August. As was the case with starts, the decrease occurred almost entirely in the multi-family component (-54,000 units or 12.7 percent). Single-family permits inched lower (5,000 units or 0.8 percent). Total permits were 0.3 percent below year-earlier levels; single- and multi-family components were, respectively, 5.2 and 9.3 percent lower.

It appears the slide in the rate of annual growth in total permits seen since late 2012 has come to an end, but it is still too early to tell whether the trend is poised to turn back up. That may be the case, as the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose four points in August, to 59; this fourth consecutive monthly gain brings the index to its highest level since November 2005. An index value above 50 means more builders feel the market is good than feel it is poor.

“Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction,” said NAHB Chairman Kevin Kelly. However, “we are still not seeing much activity from first-time home buyers,” said NAHB Chief Economist David Crowe. “Other factors impeding the pace of the housing recovery include persistently tight credit conditions for consumers and rising costs for materials, lots and labor.”

Based on the observation that not-seasonally adjusted completions were nearly equal to permits in August, Global Economic Intersection’s Steven Hansen believes potential for future growth in the housing sector is limited. Also, “whenever permits rate of growth is lower than completions,” Hansen wrote, “this industry is decelerating.” 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2014 Consumer and Producer Price Indices (incl. Forest Products)

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The seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.2 percent in August, the first such decline since April 2013. The indexes for food and shelter rose, but the increases were more than offset by declines in energy indexes, especially gasoline. The energy index fell 2.6 percent, with the gasoline index declining 4.1 percent and the indexes for natural gas and fuel oil also decreasing.

The "core" index (i.e., all items less food and energy) was unchanged in August; this was the first month since October 2010 that the index did not increase. While the shelter index increased and the indexes for new vehicles and for alcoholic beverages also rose, these advances were offset by declines in several indexes, including airline fares, recreation, household furnishings and operations, apparel, and used cars and trucks.

The all-items index increased 1.7 percent over the last 12 months, a decline from the 2.0 percent figure for the 12 months ending July, and the smallest 12-month change since March. The index for all items less food and energy also rose 1.7 percent over the last 12 months. The food index has risen 2.7 percent over the span, while the energy index has increased 0.4 percent.

The seasonally adjusted Producer Price Index for final demand (PPI) was unchanged in August. Final demand prices advanced 0.1 percent in July and 0.4 percent in June. On an unadjusted basis, the index for final demand increased 1.8 percent for the 12 months ended in August.

In August, a 0.3 percent rise in prices for final demand services offset a 0.3 percent decrease in the index for final demand goods. The advance in final demand services can be traced mainly to a 0.3 percent rise in prices for final demand services less trade, transportation, and warehousing. The decline in final demand goods is mainly attributable to prices for final demand energy, which fell 1.5 percent. The index for final demand foods decreased 0.5 percent. Prices for final demand goods less foods and energy were unchanged.  

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The price indices we track were mixed in August (relative to July). Compared to a year earlier, all indices were higher. The indices for both Wood Fiber and Lumber & Wood Products set new highs in August. 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2014 Industrial Production, Capacity Utilization and Capacity

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Industrial production edged down 0.1 percent in August, and the index for manufacturing output decreased 0.4 percent; the declines were the first for each since January. The gains in July for both indexes were revised down. The declines in total industrial production and in manufacturing output in August reflected a decrease of 7.6 percent in the production of motor vehicles and parts, which had jumped more than 9 percent in July. Excluding motor vehicles and parts, factory output rose 0.1 percent in both July and August. Meanwhile, the output of utilities rose 1.0 percent. At 104.1 percent of its 2007 average, total industrial production in August was 4.1 percent above its year-earlier level.

Wood Products and Paper output rose by 0.2 and 0.3 percent, respectively. 

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Capacity utilization for total industry decreased 0.3 percentage point in August to 78.8 percent, a rate 1.0 percentage point above its level of a year earlier and 1.3 percentage points below its long-run (1972-2013) average. Manufacturing capacity utilization declined by 0.6 percent; Wood Products fell by 0.3 percent, but Paper rose by 0.5 percent. 

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Capacity at the all-industries and manufacturing levels moved higher by, respectively, 0.3 and 0.2 percent. Wood Products extended its year-long trend when increasing by 0.4 percent. Paper, on the other hand, contracted by 0.2 percent to another new low.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

July 2014 International Trade (Softwood Lumber)

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Softwood lumber exports increased by 3 MMBF (2.3 percent) in July while imports fell by 20 MMBF (1.8 percent). Exports were 6 MMBF (3.8 percent) below year-earlier levels; imports were 73 MMBF (7.0 percent) higher. 

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Asia (especially China and Japan) was the primary destination for U.S. softwood lumber exports in July, although the rest of North America (i.e., Canada and Mexico) was a close second. China was also the largest single-country destination; year to date (YTD), exports to China were up over 35 percent relative to the same period in 2013. Meanwhile, Canada was the overwhelming source of softwood lumber imports into the United States. Overall, YTD exports were up 7.9 percent compared to the same period in 2013, while imports were up 8.4 percent. 

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Roughly 47 percent of U.S. softwood lumber exports left the country through West Coast (primarily Seattle, WA) customs districts in July. At the same time, Great Lakes customs districts (especially Duluth, MN) handled nearly 69 percent of the softwood lumber imports coming into the United States. 

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Douglas-fir comprised 22.6 percent of all softwood lumber exports in July, followed by Southern yellow pine with 21.4 percent.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

July 2014 International Trade (General)

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Total July exports of $198.0 billion and imports of $238.6 billion resulted in a goods and services deficit of $40.5 billion, down from $40.8 billion in June. July exports were $1.8 billion more than June exports of $196.2 billion. July imports were $1.6 billion more than June imports of $237.0 billion.

In July, the goods deficit decreased $0.2 billion from June to $60.2 billion, and the services surplus was virtually unchanged at $19.6 billion. Exports of goods increased $1.8 billion to $138.6 billion, and imports of goods increased $1.5 billion to $198.8 billion. Exports of services increased $0.1 billion to $59.4 billion, and imports of services were virtually unchanged at $39.8 billion.

The goods and services deficit increased $1.1 billion from July 2013 to July 2014. Exports were up $8.1 billion, or 4.3 percent, and imports were up $9.2 billion, or 4.0 percent.

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On a global scale, data compiled by the Netherlands Bureau for Economic Policy Analysis showed that world trade volume increased by 0.1 percent in June while prices rose by 0.4 percent.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2014 Monthly Average Crude Oil Price

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The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil tumbled in August, falling $7.05 to $96.54 per barrel. That price drop coincided with a slightly stronger U.S. dollar and the lagged impacts of a 317,000 barrel-per-day (BPD) increase in the amount of oil supplied in June (to 18.8 million BPD), but occurred despite further reductions in crude stocks. The monthly average price spread between Brent crude (the predominant grade used in Europe) and WTI expanded by $1.89 in August, to $5.07 per barrel.

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ASPO-USA’s Tom Whipple chalked up the nearly $10-per-barrel July-August price drop to “increasing U.S. shale oil production, which is largely offsetting disruptions elsewhere; weaker demand for oil from China; and the growing belief that neither the worsening Middle Eastern situation nor the Ukrainian - EU standoff would lead to disruptions in oil supplies in the immediate future.”

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2014 ISM Reports

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The Institute for Supply Management’s (ISM) monthly opinion survey showed that expansion of economic activity in the U.S. manufacturing sector picked up speed (to the fastest pace since March 2011) in August. The PMI registered 59.0 percent, an increase of 1.9 percentage points from July’s 57.1 percent (50 percent is the breakpoint between contraction and expansion). ISM’s manufacturing survey represents under 10 percent of U.S. employment and about 20 percent of the overall economy. Jumps in the new-orders, production, export and import sub-indices were the main sources of support for the increase.

“Comments from the panel reflect a positive outlook mixed with caution over global geopolitical unrest,” said Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee.

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Higher production and employment allowed Wood Products to expand in August. “International markets are slower due to Euro[zone] holidays, political unrest and slowing Chinese markets,” wrote one Wood Products respondent, however, adding, “North American business [is] off slightly.” Paper Products expanded thanks to higher new orders, production, order backlogs and exports.

The pace of growth in the non-manufacturing sector -- which accounts for 80 percent of the economy and 90 percent of employment -- rose to another all-time record. The NMI registered 59.6 percent, 0.9 percentage point higher than June’s 58.7 percent; the push higher was greatest in the Business Activity and Employment sub-indices. “Respondents' comments vary by business and industry,” said Anthony Nieves, chair of ISM’s Non-Manufacturing Business Survey Committee. “The majority of the comments reflect continued optimism in regards to business conditions. Some respondents indicate that there may be some tapering off in the recent strong rate of growth in the non-manufacturing sector.

Last month we reported the manufacturing PMI rose primarily because of seasonal adjustments to the new-orders sub-index that turned an unadjusted six-month low value into a seven-month high value. It was the NMI’s turn for similar treatment this month. Declining unadjusted New Orders and Employment sub-index values were turned into some of the highest values of the past several years. 

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All three service industries we track reported expansion in August, although only Construction had much breadth of support among the sub-indices.

Commodities up in price included: paper, paper products, and lumber. Commodities down in price included: natural gas, gasoline and diesel fuel. Wood pallets were once again in short supply.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2014 Currency Exchange Rates

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In August the monthly average value of the U.S. dollar appreciated against all three major currencies we track: 1.7 percent against Canada’s loonie, 1.6 percent relative to the euro, and 1.2 percent against the yen. On a trade-weighted index basis, the dollar strengthened by 0.9 percent against a basket of 26 currencies. 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

July 2014 Manufacturers’ Shipments, Inventories, and New & Unfilled Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments increased $6.0 billion or 1.2 percent to $507.4 billion in July. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.8 percent June increase. Shipments of durable goods increased $8.3 billion or 3.5 percent to $249.3 billion, led by transportation equipment. Meanwhile, nondurable goods shipments decreased $2.3 billion or 0.9 percent to $258.1 billion, led by petroleum and coal products. Wood and Paper shipments rose by 0.4 and 1.1 percent, respectively. 

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Inventories increased $0.9 billion or 0.1 percent to $653.8 billion (the highest level since the series was first published on a NAICS basis). The inventories-to-shipments ratio was 1.29, down from 1.30 in June.

Inventories of durable goods increased $1.9 billion or 0.5 percent to $401.5 billion, led by transportation equipment. Nondurable goods inventories decreased $1.1 billion or 0.4 percent to $252.3 billion, led by petroleum and coal products. Inventories of Wood expanded by 0.9 percent, while Paper was unchanged. 

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New orders increased $53.1 billion or 10.5 percent to $558.3 billion, the biggest month-over-month rise on record. Excluding transportation, however, new orders decreased 0.8 percent -- to the lowest level since March 2013. Durable goods orders increased $55.4 billion or 22.6 percent to $300.2 billion, led by transportation equipment. New orders for nondurable goods decreased $2.3 billion or 0.9 percent to $258.1 billion.

Prior to July, as can be seen in the graph above, real (inflation-adjusted) new orders had been essentially flat since early 2012 -- recouping roughly 75 percent of the losses incurred since the beginning of the Great Recession. With July’s spike, however, real new orders exceeded the previous (December 2007) peak by 2 percent. 

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Unfilled durable-goods orders increased $58.9 billion or 5.4 percent to $1,158.2 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.64, up from 6.47 in June. Real unfilled orders, a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders finally in July regained (and exceeded by 3 percent) the ground given up during the Great Recession.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.