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US Durable Goods Orders Fall in May, Too

Overall, new durable goods orders dropped 2.2% after a 3.3% bump in April, with defense aircraft orders dropping 34.1%, transportation orders tumbling 5.6%, and motor vehicles dipping 2.8%.

Durable goods orders dropped more than expected in May after increasing the two prior months, providing fresh evidence Friday of the weakness in the American manufacturing sector.

New orders for manufactured durable goods like cars, aircraft, electronics and machinery fell 2.2% in May after a 3.3% jump in April, according to Commerce Department reports. Analysts on average forecast a modest 0.6% decline.

“A pullback in May was expected, but the larger than anticipated, broad-based decline serves to reinforce underlying weakness,” said Sophia Kearney-Lederman, an economic analyst at FTN Financial. Kearney-Lederman pointed to the impact of the strong dollar, which has only surged higher following Britain’s unexpected vote Thursday to exit the European Union.

“A strong dollar and softening global growth has weighed on demand for US goods for much of the last two years. So far today, post-Brexit, the dollar has strengthened nearly 2.3%,” she said in a client note.

The volatile transportation sector was a leading factor in the May downturn.

New transportation orders, which typically swing sharply month-over-month, tumbled 5.6% in May. Orders for defense aircraft dived 34.1%. Commercial aircraft orders rose a modest 1.0% after soaring in April.

New orders for motor vehicles fell 2.8% in May, reflecting a slight cooling in U.S. auto sales.

Excluding transportation, durable goods orders fell 0.3% from April.

Copyright Agence France-Presse, 2016

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