New Durable Goods Orders Declined in April, Ending Four Straight Months of Gains

The Census Bureau said that growth in new durable goods orders declined 0.7 percent in April, ending four straight months of gains. New orders fell from $232.7 billion in April to $231.2 billion in March. With that said, much of the decrease in April stemmed from a drop in nondefense aircraft and parts orders, down 9.2 percent, which can often be quite volatile from month-to-month. Excluding transportation, new orders for nondurable goods were off by 0.4 percent, down from $153.3 billion to $152.7 billion. Despite the weaker data in this release, new durable goods orders have generally trended in the right direction lately after stalling for much of the past two years. New durable goods have edged up just 0.9 percent since April 2016, but excluding transportation, the year-over-year gain was 4.9 percent.

Looking more closely at the various durable goods sectors, the data were mixed but mostly lower. There were decreased sales reported for electrical equipment and appliances (down 1.7 percent), fabricated metal products (down 0.9 percent), machinery (down 0.8 percent), other durable goods (down 0.4 percent) and primary metals (down 0.2 percent). In contrast, sales were higher for computer and electronic products (up 1.4 percent) and motor vehicles and parts (up 0.3 percent).

The bottom line is that new orders for core capital goods (or nondefense capital goods excluding aircraft) were unchanged in April after six consecutive months of growth. This figure is often seen as a proxy for capital spending in the U.S. economy. On a year-over-year basis, core capital goods have risen 2.9 percent, up from $61.1 billion in April 2016 to $62.9 billion in this release.

Meanwhile, durable goods shipments edged up 0.3 percent. Much like the new orders data described above, the long-term picture has stabilized and is trending higher. Since April 2016, durable goods shipments have risen quite modestly, up 2.8 percent, with year-over-year growth of 4.6 percent when transportation equipment shipments were excluded. In addition, shipments of core capital goods have also improved over the past 12 months, up 1.7 percent and only the third positive year-over-year reading since July 2015, building on the progress seen in the February report.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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