Economy

Durable Goods Orders Continue Rebound

July 27, 2020

Durable goods orders rose again in June gaining 7.3 percent as a surge in auto sales helped offset a heavy decline in commercial aircraft orders. Orders for commercial aircraft and parts plummeted an astounding 462 percent last month while orders for new trucks and cars rebounded 86 percent after pandemic shutdowns.

Core capital goods, non-defense minus aircraft and a proxy for future business spending, rose 3.3 percent in June following a 1.6 percent increase in May. Demand rose for machinery, fabricated metals, primary metals, electrical equipment, appliances and components. Orders for fabricated metal products increased 4.5 percent while primary metals increased 3.6 percent.

“The more modest 3.3 percent rise in core capital goods orders indicates that businesses are still hesitant as they navigate the highly uncertain economic environment,” said Oren Klachkin, lead U.S. economist at Oxford Economics.

The rebound in business activity is good news, but may stall in July as the resurgence of COVID-19 cases in the U.S. pauses reopening of the economy.

The U.S. Census Bureau June advance report on durable goods manufacturers’ shipments, inventories and orders follows:

New Orders

New orders for manufactured durable goods in June increased $14.0 billion or 7.3 percent to $206.9 billion. This increase, up two consecutive months, followed a 15.1 percent May increase. Excluding transportation, new orders increased 3.3 percent. Excluding defense, new orders increased 9.2 percent. Transportation equipment, also up two consecutive months, led the increase by $9.2 billion or 20.0 percent to $55.3 billion.

Shipments

Shipments of manufactured durable goods in June, up two consecutive months, increased $29.4 billion or 14.9 percent to $227.1 billion. This followed a 4.2 percent May increase. Transportation equipment, also up two consecutive months, led the increase by $24.2 billion or 51.9 percent to $70.9 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in June, down three of the last four months, decreased $15.4 billion or 1.4 percent to $1,092.4 billion. This followed a virtually unchanged May increase. Transportation equipment, down four consecutive months, drove the decrease by $15.6 billion or 2.1 percent to $743.5 billion.

Inventories

Inventories of manufactured durable goods in June, up four consecutive months, increased $0.4 billion or 0.1 percent to $425.3 billion. This followed a virtually unchanged May increase. Transportation equipment, up 23 of the last 24 months, drove the increase by $2.2 billion or 1.5 percent to $146.5 billion.

Capital Goods

Nondefense new orders for capital goods in June decreased $10.3 billion or 16.4 percent to $52.2 billion. Shipments increased $2.8 billion or 4.4 percent to $66.1 billion. Unfilled orders decreased $13.9 billion or 2.2 percent to $610.0 billion. Inventories increased $1.4 billion or 0.7 percent to $193.0 billion. Defense new orders for capital goods in June decreased $2.2 billion or 16.8 percent to $10.8 billion. Shipments decreased $0.1 billion or 0.8 percent to $12.3 billion. Unfilled orders decreased $1.5 billion or 0.8 percent to $178.2 billion. Inventories increased $0.2 billion or 1.1 percent to $21.3 billion.

Revised May Data

Revised seasonally adjusted May figures for all manufacturing industries were: new orders, $411.9 billion (revised from $412.8 billion); shipments, $416.8 billion (revised from $417.0 billion); unfilled orders, $1,107.8 billion (revised from $1,108.5 billion) and total inventories, $687.1 billion (revised from $687.0 billion).