U.S. Durable Goods Orders Surprised Again on the Upside in June
Summary
- Total orders jumped 4.7% in June.
- Ex-transportation, orders rose a more modest 0.6%.
- Shipments of durable goods rose 0.3%, while total inventories were largely unchanged.
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.
Kathleen Stephansen, CBE
AuthorMore in Author Profile »Kathleen Stephansen is a Senior Economist for Haver Analytics and an Independent Trustee for the EQAT/VIP/1290 Trust Funds, encompassing the US mutual funds sponsored by the Equitable Life Insurance Company. She is a former Chief Economist of Huawei Technologies USA, Senior Economic Advisor to the Boston Consulting Group, Chief Economist of the American International Group (AIG) and AIG Asset Management’s Senior Strategist and Global Head of Sovereign Research. Prior to joining AIG in 2010, Kathleen held various positions as Chief Economist or Head of Global Research at Aladdin Capital Holdings, Credit Suisse and Donaldson, Lufkin and Jenrette Securities Corporation.
Kathleen serves on the boards of the Global Interdependence Center (GIC), as Vice-Chair of the GIC College of Central Bankers, is the Treasurer for Economists for Peace and Security (EPS) and is a former board member of the National Association of Business Economics (NABE). She is a member of Chatham House and the Economic Club of New York. She holds an undergraduate degree in economics from the Universite Catholique de Louvain and graduate degrees in economics from the University of New Hampshire (MA) and the London School of Economics (PhD abd).
More Economy in Brief
