The Census Bureau reported that new factory orders declined for the second straight month, down 0.8 percent in May, pulling back once again from March’s fastest pace since November 2014. Durable and nondurable goods orders both fell 0.8 percent in May. Yet, much of that decline for durable goods stemmed largely from sharp decreases in defense and nondefense aircraft orders, which can often be quite volatile from month to month. Excluding transportation, manufactured goods orders declined 0.3 percent, but durable goods excluding transportation increased 0.3 percent. Nonetheless, new factory orders, which have struggled mightily over the past few years, have trended largely in the right direction more recently, up 4.2 percent since May 2016. Excluding transportation, the gains were slightly larger, up 5.5 percent year-over-year.
Looking specifically at durable goods activity in May, the data were mixed but mostly higher. Demand grew for machinery (up 1.1 percent), electrical equipment, appliances and components (up 1.0 percent), primary metals (up 0.6 percent) and motor vehicles and parts (up 0.1 percent), with orders for both fabricated metal products and furniture and related products flat for the month. At the same time, computers and electronic products (down 0.2 percent), along with the aircraft and parts segments as discussed above, experienced reduced sales in May. Core capital goods—or nondefense capital goods excluding aircraft—rose 0.2 percent in May, with a gain of 5.5 percent over the past 12 months.
Meanwhile, manufactured goods shipments edged up 0.1 percent in May, slightly improving from being flat in April. Durable goods shipments grew for the month, up 1.0 percent, but activity for nondurable goods fell 0.8 percent. In addition, healthy gains for defense and nondefense aircraft and parts data buoyed the shipments data. Excluding transportation equipment, manufactured goods shipments decreased 0.3 percent, with durable goods minus transportation up a more modest 0.4 percent. On a year-over-year basis, factory shipments have risen 4.9 percent since May 2016, or 5.3 percent excluding transportation.
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