June DGOs/July 20 Claims-Weaker CapEx; Jumpy Claims

• Durables data was unequivocally weak. Core orders (ex-defense and aircraft) were down 1.4%. The 3mth annualized rate is now -5.1%, a steady decline from the double digit growth pace of 2011. This feeds into Bernanke’s view that some of the gains in employment and capex in the past year were corrections for overly deep cuts in 2008-09 rather than the start of a new uptrend.
• Core shipments were up 1.2%. That has greater implications for Q2 GDP (out tomorrow), whereas the orders data has greater implications for Q3 and Q4. Expect a slightly above consensus GDP number tomorrow (1.8% vs 1.4% consensus).
• Claims dropped by 35k to 353k. Even though the labor department stated there were no quirks, +/- 35k weekly swings in the data as we’ve had for 3 straight weeks does seem quirky.
• The 4-week average of claims did drop to 367k, the lowest since March.
• At the very least, the report suggests the labor market is holding up at worst, and suggests another 100k-type gain in payrolls for July.