The Census Bureau reported that new rose 3.6 percent in May, repeating the percentage gain that it had in April. These increases helped to offset some of the weaknesses in durable sales growth earlier in the year, with year-to-date growth in new orders of 0.8 percent. But, that figure somewhat obscures the upward trend in new orders that we have seen since the end of the recession (see the attached graphic), with higher sales growth in December skewing the analysis. Over the course of the past 12 months, new orders have risen 7.6 percent, with sales up nearly 46 percent since December 2009.
As we have seen with past reports, changes in aircraft orders tend to increase the volatility of this data. In both April and May, there were large increases in nondefense aircraft orders, helping to boost the overall numbers. Transportation equipment orders jumped 10.2 percent in May despite a 1.2 percent decline in motor vehicle sales. If you were to exclude transportation from the analysis, May’s new durable goods orders would have grown by a much smaller 0.7 percent.
Looking at the other durable goods sectors, the data were mostly positive. Areas with higher new orders for the month included computers and electronic products (up 2.7 percent), electrical equipment and appliances (up 1.4 percent), machinery (up 1.2 percent), and primary metals (up 0.9 percent). Core capital goods, or nondefense capital goods excluding aircraft, were up 1.1 percent. On the negative side (beyond autos), fabricated metal product orders were off 0.9 percent.
Meanwhile, shipments of durable goods were up 1.2 percent in May, more than offsetting the 0.6 percent decline of April. Year-to-date shipments have risen 1.5 percent, with year-over-year growth of 2.4 percent. This suggests decent, but not robust, growth in shipments over the course of the past 12 months.
May’s figure was lifted by higher nondefense aircraft shipments (up 30.4 percent), with total shipments excluding transportation up a more modest 0.2 percent for the month. Outside of aircraft, the largest gains in monthly shipments were in electrical equipment and appliances (up 2.2 percent), computers and related products (up 1.1 percent), and machinery (up 1.1 percent). Motor vehicle shipments were off 1.6 percent.
Chad Moutray is the chief economist, National Association of Manufacturers.
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