Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Article / 25 August 2016 at 5:00 GMT

3 Numbers: US durable goods orders on track for rebound

editor/analyst /
United States
  • Economists see German business sentiment edging lower in August  
  • US durable goods orders are expected to expand in July for first time since April 
  • US jobless claims to deliver more upbeat expectations for the labour market

By James Picerno

Germany’s economic outlook is in focus today with the monthly release of the Ifo survey of the country's business community. Later, two key US updates – new orders for durable goods in July and the weekly numbers on initial jobless claims – will provide more context for evaluating the recent run of upbeat third-quarter GDP forecasts.

While the macro outlook for Germany is positive, decelerating growth remains
a risk in the near term. Photo: iStock

Germany: Ifo Business Climate Index (0800 GMT) Yesterday’s revised second-quarter GDP report confirmed that Europe’s biggest economy grew by 0.4%. A key source of the expansion: exports.

Outbound shipments jumped 1.2% in the second quarter. Domestic consumption remained a positive force in the revised second-quarter data, but the 0.2% pace was relatively subdued. By contrast, investment was a drag, taking a hefty bite out of headline growth.

Although Germany’s macro trend has slowed since the first quarter, most economists still expect that a moderate expansion will continue. But investment is projected to remain weak, prompting analysts to recommend more support from Berlin. “To kickstart investment in an ageing economy, some government support is needed, not only at the national level but also at the European level,” said ING’s Germany’s chief economist.

Today’s Ifo survey data for German businesses is expected to drive home the point that while the macro outlook remains positive, decelerating growth remains a risk in the near term.’s consensus forecast calls for a mild decline in the current and expectations indices. 

If the estimate for the forward-looking benchmark holds, the August reading will dip to a three-month low. That’s not terrible, but more weakness in this widely followed slice of the numbers will serve as a reminder that Germany’s slowdown may extend into this year’s second half.

US: Durable Goods Orders (1230 GMT) Economists have been upgrading their outlook for third-quarter economic growth lately. The Wall Street Journal’s mid-August survey reflects an average GDP forecast of 2.7% for the third quarter, which represents a solid rebound after Q2’s sluggish 1.2% rise (seasonally adjusted annual rate).

Nowcasts from two regional Federal Reserve banks are projecting even stronger GDP growth. The New York Fed’s August 19 estimate sees the pace picking up to 3.0% in Q3 (as of August 19) while the Atlanta Fed’s GDPNow model anticipates a 3.6% advance (August 16).

The government’s first third-quarter estimate arrives in late October, but today’s July report on new orders for durable goods will offer an early hard-data clue for assessing the current quarter’s trend. By that standard, the crowd is looking for some good news after a rough second quarter.’s consensus forecast calls for a rebound in growth to 3.7% for new orders at the headline level for the monthly comparison in July. If so, orders will advance for the first time since April. But a strong bounce won’t be enough to reverse the downturn for the annual comparison, although the slide will at least ease.

The prospect for a kinder, gentler downturn for durable goods also finds support in recent updates of industrial production, which has been reviving in recent months after suffering in the first half. Indeed, factory output (the main component for industrial activity) increased 0.5% last month, the strongest monthly rise in a year. It’s likely that some of that strength will show up in today’s release for durable goods orders.

US: Initial Jobless Claims (1230 GMT) Earlier this week Federal Reserve Vice Chairman Stanley Fischer said that economic data is moving closer to the central bank’s targets for inflation and job growth. “Employment has increased impressively over the past six years since its low point in early 2010, and the unemployment rate has hovered near 5% since August of last year, close to most estimates of the full-employment rate of unemployment,” he observed.

Today’s update on jobless claims will provide fresh data for assessing Fischer’s cheery analysis. In keeping with the upbeat trend for this leading indicator in recent history, economists are expecting another dose of encouragement.’s consensus forecast projects new filings for unemployment benefits will tick higher, rising 3,000 to a seasonally adjusted 262,000 for the week through August 20. But that’s still close to the 43-year low of 248,000, which was set earlier this year.

If the forecast holds, and there’s no reason to think otherwise, Fisher’s upbeat outlook will draw on deeper statistical support. If so, the news will lay the groundwork for expecting a comparatively bullish report on the economy when Fed Chair Janet Yellen speaks tomorrow at the central bank’s symposium in Jackson Hole, Wyoming.

“It would be quite an event if Fischer went out so close to Yellen’s speech this week and said something” that conflicts with the Fed Chair’s comments, a former Fed board economist who’s now at Cornerstone Macro told Bloomberg. “While I don’t expect Yellen to provide much rate guidance in Jackson Hole, I think she will echo Fischer’s upbeat assessment of the US economy.”

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 – Edited by Susan MacDonald and Gayle Bryant

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


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