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Economy in Brief

U.S. Durable Goods Orders Rebound as Capital Goods Bounce Back
by Tom Moeller  July 25, 2019

Manufacturers' orders for durable goods retraced the weakness apparent in last month's report. New orders for durable goods rebounded 2.0% (-1.6% y/y) during June following a 2.3% May decline, revised from -1.3%. A 0.8% June gain had been expected in the Action Economics Forecast Survey.

A 3.8% rise (-6.5% y/y) in transportation sector orders accounted for last month's rebound as it followed a 7.5% fall in May, revised from -4.6%. Nondefense aircraft & parts orders rebounded by three-quarters after declining by one-half in May, and by one-third in April. Defense aircraft orders fell 32.1% last month (-58.1% y/y). New orders for motor vehicles & parts improved 3.1% (7.6% y/y) following a 0.9% rise. Excluding the transportation sector, durable goods orders rose 1.2% in June (0.9% y/y) after a little-revised 0.5% gain.

Orders for nondefense capital goods recovered 4.8% (-6.6% y/y) and reversed May's decline. Nondefense capital goods orders excluding aircraft grew 1.9% (2.0% y/y) after a 0.3% rise, revised from 0.4%.

Elsewhere in the durable goods report, primary metals orders rose 0.8% (-6.1% y/y) and recovered May's decline. Orders for fabricated metals increased 2.1% (2.5% y/y), up for the third straight month. Orders for computers & related products rose 0.4% (3.7% y/y). Communication equipment orders jumped 4.0% (2.2% y/y), strong for a second straight month. Orders for computers & related products fell 1.8% (-3.3% y/y) after declining 3.2% in May. Orders for machinery improved 2.4% (0.9% y/y) after a 0.2% rise. Electrical equipment orders edged slightly higher (3.7% y/y) following five consecutive months of strong increase.

Shipments of durable goods increased 1.4% (2.7% y/y) following a 0.5% rise. Transportation sector shipments jumped 3.1% (3.8% y/y) and shipments excluding transportation gained 0.5% (2.1% y/y), about as they did in May. Unfilled orders for durable goods declined 0.7% (-0.3% y/y), down for the fourth month in the last five. Order backlogs excluding transportation rose marginally (1.3% y/y) after falling 0.2% in each of the prior four months. Inventories of durable goods increased 0.3% (5.7% y/y) following two months of stronger increase. Transportation sector inventories rose 0.8% (10.5% y/y) and added to earlier months' strength. Inventories excluding transportation have been unchanged for three straight months.

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 Jun May Apr Jun Y/Y 2018 2017 2016
New Orders (SA, % chg) 2.0 -2.3 -2.8 -1.6 7.9 5.4 -1.7
  Transportation 3.8 -7.5 -7.6 -6.5 9.8 3.2 -0.6
Total Excluding Transportation 1.2 0.5 -0.2 0.9 6.9 6.5 -2.3
  Nondefense Capital Goods 4.8 -4.9 -7.0 -6.6 5.5 9.1 -5.8
    Excluding Aircraft 1.9 0.3 -1.1 2.0 6.0 6.7 -4.5
Shipments 1.4 0.5 -1.6 2.7 7.1 4.0 -2.3
Unfilled Orders -0.7 -0.8 -0.2 -0.3 3.9 1.9 -1.1
Inventories 0.3 0.5 0.4 5.7 4.8 4.5 -3.0
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