New orders for durable goods were up +1.0% in June after declines of -0.3% and -1.0% in the two previous months. The upturn was led by a +1.5% gain in transportation orders, with increases for motor vehicles (+4.4%, +5.1% Y/Y), civilian aircraft (+4.3%, +15.2% Y/Y), and defense aircraft (+20.2%, -1.7% Y/Y), and new orders excluding transportation were up +0.4% (+8.1% Y/Y). Defense capital goods orders were down -11.6% after increasing the previous two months, and removing defense spending brought overall new orders up by +1.5% (+7.7% Y/Y). Orders were up for both capital goods (+0.2%, +10.1% Y/Y) and machinery (+0.2%, +6.6% Y/Y), but fell for computers (-4.1%, -15.2% Y/Y) and primary metals (-0.4%, +16.1% Y/Y).

The Census Bureau’s Advance Economic Indicators report for June showed a -$37.776 billion (-1.5%) drop in exports and a +$1.342 billion (+0.6%) increase in imports, resulting in a $3.565 billion (+5.5%) increase in the goods trade deficit to $68.3 billion. Exports dropped for “other” goods (-10.0%), which includes defense products, consumer goods (-8.5%), automobiles (-6.1%), and capital goods (-1.8%), but rose for industrial supplies (+3.8%), which includes petroleum products. Imports dropped for both capital goods (-2.7%) and food (-1.7%), and rose for consumer goods (+3.6%), “other” goods (+1.7%), automobiles (+1.6%), and industrial supplies (+1.5%). Seasonally adjusted inventories for both wholesale and retail goods were virtually unchanged in June compared to May.

The first estimate for 2018 Q2 GDP was +4.1%, with contributions from higher rates for personal spending, exports, and government spending, and a slowing of the decrease in residential fixed investment. These contributions were offset by drops in private inventory investment, a deceleration in nonresidential fixed investment, and an increase in import growth. Personal income was up $183.7 billion in Q2 vs a $215.8 billion increase in Q1, with inflation and tax adjusted disposable personal income up +2.6% in Q2 vs +4.4% for Q1, and the savings rate at +6.8% for Q2 vs +7.2% for Q1. This month’s report included a comprehensive update for GDP figures from 1929 through Q1 2018, which included upward revisions of average GDP from +1.4% to +1.5% from 2007-2017, and from -2.8% to -2.7% from Q4 2007 through Q2 2009.