U.S. Durable Goods Orders Surge Again in June

• Durable goods orders jumped for the second straight month.

• Stronger transportation orders added to the record May increase.

• Capital goods bookings firm.

The factory sector is on the mend following the coronavirus shutdowns. New orders for durable goods jumped 7.3% during June (-12.7% y/y) following a 15.1% jump during May, revised from 15.8%. These increases followed two months of sharp decline. A 7.0% gain had been expected in the Action Economics Forecast survey. Transportation orders led the increase last month with a 20.0% rise, but they remained down 29.2% y/y. Motor vehicle & parts orders jumped 85.7% (-13.7% y/y) and offset cancellations of aircraft orders.

Order goods excluding transportation rose a steady 3.3% (-4.6% y/y), although the 3.6% May rise was revised down from 4.0%. These gains made up all but a small piece of the March/April shortfall. Nondefense capital goods orders excluding aircraft improved 3.3% (-3.2% y/y) and added to May's 1.6% rise. These increases failed to fully make up, however, April's 6.6% drop.

Elsewhere, increases in orders were broad-based. Fabricated metals orders strengthened 4.5% (-9.0% y/y) while primary metals orders rose 3.6% (-11.1% y/y). Machinery orders gained 2.7% (-8.1% y/y) after a 1.0% rise. These increases also did not recover the declines during the prior two months. Electrical machinery orders strengthened 1.2% (-7.9% y/y) after a 0.5% improvement, but did not recover April's substantial decline. Orders for computers & electronic products edged 0.1% higher (1.1% y/y).

Shipments of durable goods also were strong last month, posting a 14.9% jump (-9.5% y/y) after a 4.2% rise. The increase was led by a 51.9% rise (-19.3% y/y) in transportation shipments (mostly autos), while higher shipments of fabricated & primary metals added to the rise. Machinery shipments strengthened 3.1% (-8.6% y/y) after a 2.0% rise and electrical equipment shipments improved 2.0% (-6.5% y/y) following a 1.3% gain.

Nondefense capital goods shipments excluding aircraft strengthened 3.4% (-3.5% y/y) after moving up 1.6% in May. These gains failed to make up April's 6.4% decline.

Unfilled orders for durable goods declined 1.4% (-4.8% y/y), posting the third sharp decline in four months. Excluding the transportation sector, however, order backlogs held steady (-0.4% y/y) after declining in five of the prior six months.

Inventories of durable goods improved 0.1% (2.4% y/y) after two months of stability. Outside of the transportation sector, however, inventories were off 0.6% (-1.8% y/y) after falling 0.5%. Machinery & electrical equipment inventories recently have fallen sharply.

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