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The Durable Goods Orders report released on Friday showed an increase of 0.4%, below expectations. Analysts at Wells Fargo point out the slowdown in core orders was more gradual and shows the capex recovery continues.

Key Quotes: 

“Durable goods orders slowed sharply in August, increasing just 0.4% after an upwardly revised gain of 11.7% in July. The downdraft stemmed in part from a 4.0% drop in motor vehicles as pent up demand from shutdowns shows signs of exhaustion.”

“The rise in core orders suggests that while slowing, the recovery in capex is not screeching to a halt and starting from a better place.”

“Nondefense capex shipments jumped 3.3% in August. Through the first two months of Q3, the series is up at a 33% annualized rate and signals equipment spending will be a key contributor to the third quarter’s bounce back in GDP.”