The Census Bureau reported that durable goods orders rose 0.2 percent in April, a slight improvement after March’s 3.7 percent decline. Excluding transportation orders, though, makes a difference. Without transportation, new orders would have fallen by 0.6 percent. Indeed, the strongest gains in April were seen in nondefense aircraft (up 7.2 percent) and motor vehicles (up 5.6 percent).
Outside of transportation, the report mostly observed weaknesses in the sector for new orders. Some of the greatest losses in new orders occurred among defense aircraft (down 34 percent), communications equipment (down 16.9 percent), computers (down 3.1 percent), machinery (down 2.8 percent) and fabricated metals (down 2 percent). One of the sectors bucking this trend was primary metals, whose new sales rose 1.7 percent.
As a result, core capital goods orders (e.g., nondefense capital goods excluding aircraft) were down 1.9 percent in April. This follows a 2.2 percent drop in March. The longer-term trend has been more favorable, with core capital goods up 2 percent year-over-year. The challenge is that new orders are a proxy of new activity, and this suggests weaknesses in durable goods activity in the next month or so.
Meanwhile, shipments of durable goods rose 0.7 percent. Many of the same trends can be seen in the shipments data, with transportation lifting the overall figure. Excluding transportation, durable goods shipments fell 0.3 percent. Still, this was the fifth consecutive month of rising shipment volume. Inventories rose by 0.3 percent, continuing their long streak of gains, with unfilled orders dropping by 0.1 percent.
Chad Moutray is chief economist, National Association of Manufacturers.
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