The Census Bureau reported that durable goods orders rose 1.6 percent in June, equaling the revised growth rate of May. This was led by strong growth in airplane orders. Nondefense and defense aircraft and parts rose 14.3 percent and 23.9 percent, respectively, for the month.
However, the broader durable goods sector reflected the weaknesses seen in other economic indicators. Excluding transportation, new orders declined 1.1 percent. Similarly, core capital goods (or nondefense capital goods excluding aircraft) dropped 1.4 percent.
There were several sectors where new orders were lower in June. These include computers and electronics products (down 4.9 percent), fabricated metal products (down 1.2 percent), machinery (down 1.1 percent), electrical equipment and appliances (down 0.7 percent), and motor vehicles (down 0.6 percent). Primary metals bucked this trend, up 0.9 percent.
Meanwhile, shipments of durable goods were up 0.1 percent in June, their slowest rate since February. Shipments had grown 1.2 percent in May. In this case (and reflecting the volatility in this market), transportation shipments were a drag on the overall figure, with shipments excluding transportation up 0.5 percent. Sectors with the largest gains in shipments for the month included machinery (up 3.1 percent) and defense aircraft and parts (up 1.2 percent).
These results provide mixed news. New durable goods orders are nearly 8 percent higher today than one year ago, with aircraft orders lifting this month’s growth numbers. Yet, it is also clear that there are larger weaknesses reflected in these results. Higher shipments should improve tomorrow’s gross domestic product results slightly, but the slower growth in new orders suggests output in the months ahead might be choppier.
Chad Moutray is chief economist, National Association of Manufacturers.