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Economy in Brief

U.S. Durable Goods Orders Rebound, Powered by Aircraft
by Tom Moeller  July 26, 2018

Improvement in factory sector activity continues. New orders for durable goods strengthened 1.0% (3.2% y/y) during June after declines in the prior two months. The 0.3% May shortfall was revised from -0.6%. The latest gain fell short of expectations for a 3.0% increase in the Action Economics Forecast Survey. Orders declined at a 1.4% annual rate during the last three months.

A 2.2% increase (-6.2% y/y) in transportation equipment orders powered the rise in overall orders as it reversed a 1.4% May shortfall. Aircraft & parts orders surged 8.7% following a 2.0% drop. The gain reflected a 20.2% surge in defense aircraft bookings which were strong for the third straight month. Orders for motor vehicles & parts improved 4.4% (6.4% y/y) and reversed May's decline. Excluding the transportation sector altogether, durable goods orders rose 0.4% (9.1% y/y) after a 0.3% rise, revised from a 0.3% fall. Non-transportation orders have surged at a 10.7% annual rate during the last three months.

Orders for nondefense capital goods increased 2.3% (-7.7% y/y) after a 2.2% May decline. Orders excluding aircraft increased 0.6% (8.3% y/y) following a 0.7% rise, revised from -0.2%. Defense capital goods orders decreased 11.6% (+4.7% y/y) after a 16.7% rise.

Within other durable goods sectors, electrical equipment bookings gained 1.5% (9.1% y/y) after a 0.5% easing. Orders for computers & electronic components increased 0.6% (10.3% y/y) for a second straight month. Computer & related product orders declined 4.1% (-17.4% y/y) following a 0.8% fall. Communication equipment orders held steady (14.6% y/y) after a 6.7% jump. Orders for machinery rose 0.2% (6.0% y/y) after a 1.7% jump. Fabricated metals orders inched 0.1% higher (10.2% y/y) following a 1.2% decline. Orders for primary metals fell 0.4% (+18.2% y/y) after a 0.1% slip.

Shipments of durable goods increased 1.7% (7.7% y/y) following a 0.2% rise. Shipments excluding transportation equipment gained 0.6% (8.2% y/y) for the second straight month. Unfilled durable goods orders rose 0.4% (3.6% y/y), up for the fifth consecutive month. Backlogs excluding the transportation sector gained 0.5% (5.7% y/y). Durable goods inventories slipped 0.1% (+4.6% y/y), down for the first month since December 2016. Inventories outside of the transportation sector rose 0.5% (5.6% y/y), the largest increase in three 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 2017 2016 2015
New Orders (SA, % chg) 1.0 -0.3 -1.0 3.2 5.4 -1.7 -5.0
  Transportation 2.2 -1.4 -6.1 -6.2 3.4 -0.7 -6.3
Total Excluding Transportation 0.4 0.3 1.9 9.1 6.5 -2.3 -4.2
  Nondefense Capital Goods 2.3 -2.2 -6.7 -7.7 9.1 -5.8 -11.8
    Excluding Aircraft 0.6 0.7 2.0 8.3 6.7 -4.5 -5.5
Shipments 1.7 0.2 -0.0 7.7 4.0 -2.4 -0.8
Unfilled Orders 0.4 0.5 0.6 3.6 2.0 -1.2 -2.7
Inventories -0.1 0.3 0.4 4.6 4.6 -3.0 0.9
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