Article / 27 July 2017 at 4:59 GMT

3 Numbers: US durable goods orders on track for a June rebound

editor/analyst /
United States
  • Modest growth for UK retail spending is expected in today’s CBI survey data
  • Brexit uncertainty and higher inflation are weighing on consumer sentiment
  • US durable goods orders should surge to a three-year high in the June report
  • The US growth trend to June should firm up in the Chicago Fed's macro review
By James Picerno

A busy day of economic news awaits for Thursday, including the July report for the UK Distributive Trades Survey, which offers an early estimate of retail spending at the start of the third quarter. Later, two US updates will shed new light on the state of the economy in June via fresh numbers on durable goods orders and the Chicago Fed National Activity Index.

UK: Distributive Trades Survey (1000 GMT) Economists have been advising that the ongoing decline in real wage growth is a headwind for retail sales in Britain. The hard data for spending in June, however, delivered a stronger-than-expected increase. Analysts will be looking at today’s survey profile for July for deciding if the bullish results for June will spill over into the start of the third quarter.


A mildly softer reading is likely for the UK Distributive Trades Survey for July, leaving room for managing expectations down for the next round of hard retail data. Photo: Shutterstock

Meantime, “a particularly warm June seems to have prompted strong sales in clothing, which has compensated for a decline in food and fuel sales for the month,” a senior statistician at the Office for National Statistics said last week.

The upbeat results for last month lifted the annual pace of retail spending to a moderate 2.9% increase, sharply above May’s weak 0.9% advance.

Today’s CBI Distributive Trades Survey report for July offers some perspective on how sales will fare this month. Based on the consensus forecast via, the crowd’s expecting a mildly softer reading: just 9 for July versus 12 in the previous month. That’s a relatively encouraging outlook, although it leaves room for managing expectations down a bit for the next round of hard retail data.

“The vote for Brexit has created a more uncertain climate for business and a squeeze on consumers from higher inflation,” a senior economic adviser at PwC explained last week. “We face the prospect of weak economic growth this year and next as a result, with PwC’s latest forecasts indicating 1.5% GDP growth in 2017 and 1.4% in 2018, the weakest period for the UK economy since the euro crisis five years ago.”


Create your own charts with SaxoTrader; click here to learn more.

US: Durable Goods Orders (1230 GMT) The crowd’s expecting an encouraging change in the trend for durable goods. Forecasts always deserve to be taken with a grain of salt, but if analysts are right about today’s data, the year-over-year change for orders is due to surge to a three-year high.

Let’s do the maths. Economists are looking for a solid 3.5% monthly advance in new orders, the first increase in three months and the strongest rise since last October. But the main event may show up in the implied annual change. Assuming the monthly forecast is accurate, the implied estimate for year-over-year orders is set to jump 12.1%, the most since July 2014.

Survey data for July hints at the potential for an acceleration in orders. This month’s flash reading of the US Manufacturing PMI ticked up to 53.4, a four-month high that signals a moderate pace of economic activity for the sector. IHS Markit noted on Monday that new orders for companies posted the strongest print in six months.

Today’s report is expected confirm the PMI’s positive spin. If so, the news will boost expectations that the mixed profile for manufacturing in recent months is due for a rebound in this year’s second half.


US: Chicago Fed National Activity Index (1230 GMT) US economic growth may or may not be accelerating, but recession risk remains low.

As I outlined last week, the macro trend remained moderately positive through June, based on a broad set of indicators. The upbeat profile is expected to continue in July and August. As a result, the probability is virtually nil that an NBER-defined recession has started or is about to start. A bolt from the blue could change the analysis, of course, but the numbers in hand at the moment suggest that a moderate expansion remains the path of least resistance for the immediate future.

Today’s June release of the Chicago Fed National Activity Index (CFNAI) is expected to reaffirm the analysis.’s consensus forecast calls for a solid rebound in the monthly reading of the index, which translates to an implied increase for CFNAI’s three-month average (CFNAI-MA3) to 0.14, which is close to a three-year high.

A positive CFNAI-MA3 equates with an above-average trend for economic activity. By that standard, output has been running above trend for most of this year and today’s release looks set to extend that record into June.

As for recession risk, CFNAI-MA3 is on track to confirm that a new contraction is nowhere on the horizon. Indeed, the three-month average’s implied 0.14 forecast is far above the -0.7 tipping point that marks contractionary periods.

The US economy is still struggling with any number of challenges, but battling a new recession is unlikely to be on the list for the foreseeable future.

– Edited by Robert Ryan

For more on forex, click here.

James Picerno is a macro analyst/editor at Follow James or post your comment below to engage with Saxo Bank's social trading platform.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail