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Markets received some positive news on Wednesday in the form of the U.S. durable goods report for July, which surprised to the upside. An unexpected decline in crude inventories was reported by the Energy Information Administration, while Atlanta Fed President Dennis Lockhart spoke at an economic outlook conference.Durable goods excluding transportation posted another strong result in July, rising 0.7% despite forecasts for a 0.7% decline, according to the Department of Commerce. June's figure was revised to a 2.4% gain compared to the preliminary 2.0% reported.
Total sales of durable goods increased 1.3% against expectations for a flat reading. This follows an upwardly revised 1.3% advance in June, which was previously reported as a 0.8% increase. Excluding defence, orders were up 2.8% following an increase of 0.6% in the previous month.
"The strength of US durable goods orders in July is probably more a reflection of the resilience of demand abroad than it is a sign that domestic business investment is doing well," said Paul Ashworth, senior U.S. economist from Capital Economics. "The national accounts figures show domestic business spending on equipment and software actually contracted in Q2. Nevertheless, at the very least it suggests exports will put in another strong performance in Q3."
Speaking at an economic outlook conference, Atlanta Fed President Dennis Lockhart said he welcomes the recent rise in the U.S. dollar and speculated that housing prices could fall another 15%. In his prepared comments, Lockhart said recent measures of inflation are uncomfortably high, but that higher prices are likely more transitory than persistent. Lockhart said he expects CPI inflation to peak at or near July's level of 5.6%.
Annual unemployment rates grew higher in July in 338 out of 369 metropolitan areas, while falling in 25 other areas, according to the U.S. Bureau of Labor Statistics. The unemployment rate in July was at least 10% in 11 of the areas, up from six in June, while nine areas registered rates below 3%. The national unemployment rate for the month was 6.0%, not seasonally adjusted, up from 4.9% a year ago.
U.S. crude oil stockpiles decreased by 177k barrels in the week ending Aug. 22, while gasoline supply fell 1179k, the Energy Information Administration reported. The crude oil build is the largest since March 2001, while the gasoline draw was the second largest in the past 10 years. The largest draw was the prior week. Gasoline inventories were expected to decline 2450k barrels
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