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Economy in Brief

U.S. Durable Goods Orders Drop, But Trend Improvement Remains in Place
by Tom Moeller  June 26, 2017

New orders for durable goods declined 1.1% during May following an unrevised 0.9% April fall. Despite the decline, orders increased 2.7% y/y after falling 1.7% during all of last year. A 0.6% decrease in orders had been expected in the Action Economics Forecast Survey.

The decline in durable good orders was led by a 3.4% fall (-2.5% y/y) in transportation bookings, which followed a 1.8% drop. The decline was paced by a 30.8% plunge (+11.6% y/y) in orders for defense aircraft. Civilian aircraft orders were off 11.7% (-37.4% y/y). Motor vehicle & parts orders rose 1.2% (5.0% y/y) after increasing 0.5%.

Electrical equipment orders increased 1.0% (3.6% y/y) following a 2.0% shortfall. Machinery orders gained 0.6% (9.5% y/y), but orders for computers & electronic products slipped 0.2% (-0.1% y/y). Computer orders were off 3.2% (-5.5% y/y), down sharply for the second month in three. Communication equipment orders retreated 3.1% (-3.0% y/y) after a 3.6% rise. Orders for electrical equipment increased 1.0% (3.6% y/y) after a 2.0% fall. Fabricated metals orders eased 0.2% (+8.0% y/y), but primary metal orders gained 0.3% (10.2% y/y).

Nondefense capital goods orders declined 2.4% (-3.2% y/y), about the same as in April. Orders excluding aircraft eased 0.2% and have been stable for four months. The 5.0% y/y increase compared, however, to sharp declines in 2015 and 2016.

Shipments of durable goods increased 0.8% (4.0% y/y) and excluding transportation they improved 0.2% (4.9% y/y). Order backlogs slipped 0.2% (-1.6% y/y) while excluding transportation, unfilled orders improved 0.3% (3.0% y/y). Inventories of durable goods gained 0.2% (1.6% y/y) and also strengthened 0.2% (0.3% y/y) excluding the transportation sector.

The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.

Durable Goods NAICS Classification May Apr Mar May Y/Y 2016 2015 2014
New Orders (SA, %) -1.1 -0.9 2.4 2.7 -1.7 -4.6 4.7
  Transportation -3.4 -1.8 5.4 -2.5 -3.4 -6.2 8.2
Total Excluding Transportation 0.1 -0.5 0.9 5.5 -0.7 -3.6 2.9
  Nondefense Capital Goods -2.4 -2.5 1.9 -3.2 -7.1 -11.0 0.9
    Excluding Aircraft -0.2 0.2 0.0 5.0 -4.6 -4.3 0.3
Shipments 0.8 -0.3 -0.1 4.0 -1.6 -0.6 3.8
Unfilled Orders -0.2 0.2 0.3 -1.6 -1.7 -2.0 8.3
Inventories 0.2 0.2 0.3 1.6 -0.7 1.6 4.7
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