The June US durable goods report looked quite awful at first glance. Expectations had been for a modest 0.9-1.0% increase for the month, but instead total orders dropped 1%, after falling 0.8% in May. That would suggest that the string of poor economic releases from the US continues and will cast a heavy shadow on the prospects for the outlook for the recovery.

Can’t blame the big fall on the transportation sector, as orders excluding transportation were down 0.6% as well. Within the transportation sector orders for airplanes fell while demand for cars and motor parts increased (2.5%). As durable goods are those designed to last more than 3 years its a sign that the manufacturing sector is cooling, and most of the decline was focused in industrial sectors such as electronics (-1.9%), machinery (-0.7%), and metals (-2.0%). Manufacturing as we should remember has been at the driver seat of the recovery and its slowdown is a bad sign. On a positive note, there was a pretty big increase in orders for computers (+2.5).

Still, there is one takeaway from this data, and that was a barometer of capital spending by business rose. Orders for non-defense capital goods excluding aircraft increased by 0.6%, after rising 4.6% in May. Expectations had been for a flat reading. That could mean that companies see the economy recovering in a way that they need to upgrade their capital infrastructure.

Overall, like I said at at the top of the story, this data will add to other data showing that the manufacturing is slowing following a strong rebound earlier in the year. With consumer confidence falling – and the propsect of weaker spending that comes with it – there is going be a challange on how to get the US economy moving again.