A Large Jump in Nondefense Aircraft Sales Boosted Durable Goods Orders in June

The Census Bureau said that growth in new durable goods orders leapt 6.5 percent, up from $230.7 billion in May to $245.6 billion to June, rebounding from declines in both April and May. This was the highest level since July 2014’s all-time high of $290.7 billion. Nonetheless, the bulk of that increase stemmed from a jump in nondefense aircraft and parts orders (up from $11.0 billion in May to $25.3 billion in June), likely centering around the International Paris Air Show. Excluding transportation equipment, new durable goods orders were up by 0.2 percent in June, extending the 0.6 percent gain seen in May. New durable goods orders have generally trended in the right direction over the course of the past 12 months. New durable goods have soared 16.1 percent since June 2016, but excluding transportation, the year-over-year gain was a still quite healthy 6.8 percent.  

Looking more closely at the various durable goods sectors in June, the data were mixed. There were increased sales for fabricated metal products (up 0.7 percent), other durable goods (up 0.5 percent), machinery (up 0.2 percent) and primary metals (up 0.1 percent). In contrast, sales were weaker for electrical equipment and appliances (down 1.7 percent), motor vehicles and parts (down 0.6 percent) and computers and electronic products (down 0.3 percent). The bottom line is that new orders for core capital goods (or nondefense capital goods excluding aircraft) was off 0.1 percent in June. 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 5.6 percent, up from $60.1 billion in June 2016 to $63.4 billion in this release.

Meanwhile, durable goods shipments were unchanged in June. Much like the new orders data described above, the long-term picture continues to trend higher. Since June 2016, durable goods shipments have risen at decent rates, up 4.3 percent, with year-over-year growth of 5.4 percent when transportation equipment shipments were excluded. In addition, shipments of core capital goods have also improved over the past 12 months, up 4.0 percent year-over-year.

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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