Economy

Durable Goods Orders Surprisingly Strong in July

August 27, 2020

Orders for durable goods jumped 11.2 percent in July after rising 7.7 percent in June, posting gains for the third straight month and beating all expectations. Automotive orders drove the increase, leaping 22 percent following a robust 24 percent increase in June.

Orders for core capital goods–nondefense goods excluding aircraft which are considered an indicator for future business spending–rose 1.9 percent in July, down from 4.3 percent in June.

Commercial aircraft orders were negative for the month, with no orders reported by Boeing.

“U.S. durable goods orders made more progress toward recovering in July despite the resurgence in the virus,” said economist Katherine Judge of CIBC Economics, but “we continue to see the recovery in business investment from here as occurring relatively slowly given the prevalence of spare capacity.”

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

New Orders

New orders for manufactured durable goods in July increased $23.2 billion or 11.2 percent to $230.7 billion. This increase, up three consecutive months, followed a 7.7 percent June increase. Excluding transportation, new orders increased 2.4 percent. Excluding defense, new orders increased 9.9 percent. Transportation equipment, also up three consecutive months, led the increase by $19.6 billion or 35.6 percent to $74.7 billion.

Shipments

Shipments of manufactured durable goods in July, up three consecutive months, increased $16.6 billion or 7.3 percent to $244.0 billion. This followed a 15.2 percent June increase. Transportation equipment, also up three consecutive months, led the increase by $12.6 billion or 17.8 percent to $83.2 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in July, down four of the last five months, decreased $8.2 billion or 0.8 percent to $1,084.4 billion. This followed a 1.4 percent June decrease. Transportation equipment, down five consecutive months, drove the decrease by $8.4 billion or 1.1 percent to $735.2 billion.

Inventories

Inventories of manufactured durable goods in July, down two consecutive months, decreased $1.9 billion or 0.5 percent to $422.6 billion. This followed a 0.1 percent June decrease. Machinery, down six of the last seven months, led the decrease by $0.7 billion or 1.0 percent to $69.7 billion.

Capital Goods

Nondefense new orders for capital goods in July increased $5.4 billion or 10.2 percent to $58.0 billion. Shipments increased $1.3 billion or 2.0 percent to $67.6 billion. Unfilled orders decreased $9.5 billion or 1.6 percent to $600.8 billion. Inventories increased $0.6 billion or 0.3 percent to $193.3 billion. Defense new orders for capital goods in July increased $3.2 billion or 30.0 percent to $14.0 billion. Shipments increased $0.1 billion or 1.2 percent to $12.3 billion. Unfilled orders increased $1.7 billion or 1.0 percent to $180.0 billion. Inventories increased less than $0.1 billion or 0.1 percent to $21.2 billion.

Revised June Data

Revised seasonally adjusted June figures for all manufacturing industries were: new orders, $438.1 billion (revised from $437.2 billion); shipments, $458.1 billion (revised from $457.3 billion); unfilled orders, $1,092.7 billion (revised from $1,092.5 billion); and total inventories, $690.4 billion (revised from $690.9 billion).