The Census Bureau reported that durable goods orders rose 1.1 percent in May, rebounding from declines in both March and April. For the second month in a row, transporation orders were strong, up 2.7 percent with the largest gains in aerospace. Excluding transportation goods, new orders would have risen by 0.4 percent.
Along these lines, core capital goods (or nondefense capital goods excluding aircraft) rose 1.6 percent for the month. Other sectors with strength in May include machinery (up 4.1 percent), computers and related products (up 3.3 percent), communications equipment (up 2.3 percent), and electronic equipment and appliances (up 1.1 percent). Metals industries experienced declines, with primary metals orders down 1.5 percent and fabricated metal products down 0.2 percent.
Meanwhile, shipments of durable goods rose 0.7 percent in May. This was the same rate as was observed in April and the third consecutive monthly increase. Transportation dominated these numbers, as well, particularly in the aerospace categories. Other sectors which did well, mirroring those listed above for new orders. Motor vehicle shipments rose 0.4 percent, slower than the growth rates of March and April. Inventories rose by 0.5 percent, continuing their long streak of gains, with unfilled orders unchanged.
Overall, these numbers are welcome news. With so many other indicators reflecting weaknesses in the manufacturing sector, durable goods growth appears to be strengthening after signficant headwinds in March and April. Transportation orders account for the bulk of this gain, but the increases were not limited to motor vehicles and airplanes. Given the importance of the durable goods sector over the past couple years in our recovery, it will be vital for us to get this sector growing strongly again.
Chad Moutray is chief economist, National Association of Manufacturers.
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