Under the Hood of U.S. Durables Data Lies an Inventory Reversal

Here’s the takeaway from the Commerce Department’s report Wednesday in Washington that showed orders for U.S. durable goods rose 2 percent, exceeding the highest estimate of economists surveyed by Bloomberg.

* Inventories were little changed in July after growing 0.4 percent the prior month, less than previously estimated

* A surge in inventories is projected to have boosted second-quarter gross domestic product when revised data are issued later this week

* The July reading on stockpiles signals manufacturers are starting to fill orders out of existing stocks

What Economists Said Before the Report:

“The fact that inventory levels are high probably means that new orders slow as they need to work off excess inventories,” said Brett Ryan, U.S. economist at Deutsche Bank Securities Inc. in New York.

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