The Census Bureau reported that growth in new durable goods orders fell for the second straight month in May, down 1.1 percent. New orders decreased from $230.7 billion in April to $228.2 billion in May. Much of the decline in May stemmed from a drop in defense and nondefense aircraft and parts, down 30.8 percent and 11.7 percent, respectively, which can often be quite volatile from month to month. Excluding transportation, new orders for durable goods edged up 0.1 percent from $152.6 billion to $152.8 billion. Despite the weaker overall data in this release, new durable goods orders have trended generally in the right direction across the past 12 months, growing modestly. New durable goods have risen 2.7 percent since May 2016, but excluding transportation, the year-over-year gain was a more robust 5.5 percent.
Looking more closely at the various durable goods sectors, the data were mixed. Sales increased for motor vehicles and parts (up 1.2 percent), electrical equipment, appliances and components (up 1.0 percent), machinery (up 0.6 percent) and primary metals (up 0.3 percent). In contrast, sales decreased for computers and electronic products (down 0.2 percent), fabricated metal products (down 0.2 percent) and other durable goods (down 0.2 percent). The bottom line is that new orders for core capital goods (or nondefense capital goods excluding aircraft) fell 0.2 percent in May. 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 5.0 percent, up from $59.9 billion in May 2016 to $62.9 billion in this release.
Meanwhile, durable goods shipments rose 0.8 percent in May. Much like the new orders data described above, the long-term picture continues to trend higher. Since May 2016, durable goods shipments have risen at a decent rate, up 4.0 percent, with year-over-year growth of 4.9 percent when excluding transportation equipment shipments. In addition, shipments of core capital goods have also improved over the past 12 months, up 2.8 percent year-over-year.