The Census Bureau reported that new durable goods orders rose 4.2 percent in July, its largest gain of the year. This increase was led by a sharp rise in new orders for transportation equipment (up 14.1 percent), primarily among motor vehicles and nondefense aircraft. If you were to exclude transportation, new orders would have fallen by 0.4 percent. Similarly, sales of core capital goods, or nondefense capital goods excluding aircraft, fell 3.4 percent.
These numbers suggest broader weaknesses for manufacturers outside of autos and commercial airplanes. For example, defense aircraft (down 8.5 percent), communications equipment (down 4 percent), machinery (down 3.6 percent), and electrical equipment and appliances (down 2.1 percent) suffered losses in new orders. There were some sectors with positive new orders, including computers (up 3.7 percent) and primary metals (up 2.7 percent).
Meanwhile, shipments increased 2.6 percent in July, an improvement over being unchanged in June. For the most part, the story for shipments mirrors the one for new orders, with transportation leading the gain. If transportation equipment shipments were excluded, the increase was just 0.3 percent.
Chad Moutray is chief economist, National Association of Manufacturers.
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