The Census Bureau said that new durable goods orders declined by 1.8 percent in May, extending the 1.5 percent decrease observed in April. Nonetheless, while April’s lower data reflected broader softness in the market, the May pullback mainly reflected reduced aircraft sales for the month. Aircraft orders are often bulked together in batches, making them more volatile from month-to-month. As a whole, transportation equipment orders fell 5.4 percent in May, largely on the decreases for aircraft. Motor vehicles sales were flat. On the positive side, we would expect a significant uptick in this category in the June data, with aircraft sales lifted by the recent Paris Air Show.
Excluding transportation, new durable goods orders were up 0.5 percent in May, rebounding from a 0.3 percent decline in April. That provides a degree of comfort, and yet, we have seen softness in this measure over much of the past year. New durable goods orders excluding transportation measured $157.2 billion in May, down 1.6 percent year-over-year from $159.8 billion in May 2014. Indeed, this broader measure has fallen from $164.3 billion in September, its peak of 2014, but it has also edged marginally higher since bottoming out at $156.0 billion just three months ago.
Looking specifically at the May data, there were increased sales for computer and electronic products (up 2.2 percent), fabricated metal products (up 0.6 percent), primary metals (up 0.6 percent) and machinery (up 0.4 percent). Core capital goods orders (or nondefense capital goods excluding aircraft) were up 0.4 percent, recovering modestly from the 0.3 percent decline in the prior month. In contrast to these sectors, electronic equipment and appliances (down 0.4 percent) and miscellaneous durable goods (down 0.3 percent) had decreased sales in May.
Meanwhile, durable goods shipments were off for the second straight month, down 0.2 percent and 0.1 percent, respectively, in April and May. Much like new orders, however, shipments excluding transportation equipment were a bit stronger in May, up 0.3 percent. On a year-over-year basis, durable goods shipments have risen modestly, up 2.7 percent, but this data has changed very little since the fall. In May, there were increased shipments for computers and electronic products (up 1.9 percent), machinery (up 0.8 percent) and motor vehicles and parts (up 0.1 percent). Other major sectors had declines.
Chad Moutray is the chief economist, National Association of Manufacturers.
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