The Commerce Department reported today that new orders for manufactured products rose by 1.2% to a record $406 billion in June. The gain in June was all in durable goods (fabricated metals, primary metals, computers and electronics, transportation equipment and furniture all posted gains). Meanwhile, following very strong gains in April and May, new orders for nondurable fell by 0.7% in June (9 of 11 nondurable sectors posted falling orders).
Since manufacturing orders tend to bounce around from month-to-month like a Yo-Yo, measuring orders over a 3-month span gives a little better perspective on the health of manufacturing. Here we see that new orders for durable products has dropped off by 1.7% in the 3 months ending in June, due primarily to big drop-offs in transportation and computers after big increases earlier in the year.
Excluding these two sectors, new orders for durable manufactured products have risen by 4.7% over the past 3 months (primary metals up 12.4%, electrical equipment 8.7%, fabricated metals 5.3%, machinery 3.7% and furniture 2.7%). At the same time, nondurable orders are up 2.3% over the past 3 months.
While the overall U.S. economy is slowing, today’s report indicates that the manufacturing recovery remains on solid ground. Tomorrow, the Labor Department will report on the employment situation in July, where I expect manufacturing production employment will rise for a 10th consecutive month.
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