U.S. Durable Goods Orders Surprised Again on the Upside in June

New orders for durable goods rose a strong 4.7% (8.9% y/y) in June, following a 2.0% (5.7% y/y) monthly gain in May, (initially up 1.7% m/m). June represents a fourth consecutive monthly gain. The Action Economics Forecast Survey had looked for a smaller monthly advance of 1.8%. Shipments of durable goods rose 0.3% (3.8% y/y) in June, up three of the last four months and following a 2.0% (3.6% y/y) rise in May (initially up 1.7% m/m).

Transportation orders made another significant contribution to the rise in overall orders in June. They were up 12.1% m/m (26.0% y/y) after a 4.3% rise (18.1% y/y) in May (initially up 3.9% m/m). A whopping 57.1% m/m gain in orders for aircraft and parts provided a major boost to overall transportation orders, following a 12.5% rise in May. The June increase reflected a 69.4% m/m jump in nondefense aircraft orders and a 5.5% m/m gain in defense aircraft orders. Orders excluding transportation increased 0.6% m/m in May, after a 0.7% rise in May (revised up from a 0.6% m/m gain).

Across other sectors, the June rise in orders reflected increases in major categories except for defense orders. Both orders for computers and electronic products and for electrical equipment posted monthly gains of 1.5%. Total defense orders contracted 17.1% in June, following a decline of 12.7% m/m in May. Excluding those, the remaining orders rose a robust 6.2% m/m in June, after a 3.2% rise in May.

Shipments of all manufactured goods edged up 0.2% m/m (-2.6% y/y) in June, following a 0.4% m/m (-1.8% y/y) in May (initially reported as up 0.2% m/m). Shipments of durable goods rose 0.3% m/m in June, while shipments of nondurable goods edged up 0.1% m/m. Transportation shipments rose a mere 0.2% m/m in June and excluding transportation, other shipments of durable goods increased 0.3% m/m.

Capital goods orders contained in this report provide important information concerning business spending on equipment. Orders for nondefense capital goods excluding aircraft (core capital goods) increased 0.2% m/m (1.9% y/y) in June, following a downwardly revised 0.5% m/m rise in May (initially up 0.7% m/m). Core capital goods shipments were barely changed in June (+3.3% y/y) following a 0.3% rise in May (revised from up rose 0.2% m/m). These data leave Q2 core capital shipments up an annualized 1.9%, down from 2.3% in Q1.

Inventories of all manufacturing industries were largely unchanged over the month (-0.1% y/y) during June, following a decline of 0.3% m/m in May. Inventories of durable goods rose 0.1% m/m in June, while inventories of nondurable goods fell 0.2% m/m, their fifth consecutive monthly decline.

Unfilled orders of durable goods rose 1.8% m/m (6.7% y/y) in June, after a rise of 0.8% m/m (5.6% y/y) in May.

Manufacturers’ orders and shipments of durable goods, as well as nondurable goods, are compiled by the U.S. Census Bureau; they are available in Haver’s USECON database. Unfilled orders and inventories are also included. The Action Economics forecast data are in the AS1REPNA database.