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Economy in Brief

Transportation Drives U.S. Durable Goods Orders Higher
by Gerald D. Cohen  August 26, 2019

Manufacturers' orders for durable goods rose 2.1% in July (0.7% year-on-year) following a slightly downwardly revised increase of 1.8% gain in June. The Action Economics Forecast Survey expected a 1.4% gain. Orders for transportation equipment jumped 7.0% (2.3% y/y) powered by a 44.2% jump in volatile aircraft orders (-2.8% y/y); orders for motor vehicles increased 0.5% (3.8% y/y). Nondefense capital goods orders less aircraft, which is a forward-looking indicator of capital spending, grew 0.4% (-0.3% y/y), following a 0.9% increase in June. In the second quarter, inflation-adjusted non-residential fixed investment declined at a 0.6% annual rate (+2.7% y/y).

Excluding the transportation sector, orders declined 0.4% in June (-0.1% y/y). 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 July (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 June'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 June'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 June. 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 June. 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 Jul Jun May Jul Y/Y 2018 2017 2016
New Orders (SA, % chg) 2.1 1.8 -2.3 0.7 8.0 5.4 -1.7
  Transportation 7.0 4.1 -7.5 2.3 9.9 3.2 -0.6
Total Excluding Transportation -0.4 0.8 0.4 -0.1 7.0 6.5 -2.3
  Nondefense Capital Goods 5.0 5.0 -5.0 0.4 5.6 9.1 -5.8
    Excluding Aircraft 0.4 0.9 0.2 -0.3 6.0 6.7 -4.5
Shipments -1.1 1.0 0.5 1.1 7.1 4.0 -2.3
Unfilled Orders 0.1 -0.6 -0.8 -0.4 3.9 1.9 -1.1
Inventories 0.4 0.3 0.5 4.6 4.8 4.5 -3.0
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