A Boeing 787 Dreamliner prepare for landing Stephen Brashear, Getty Images

Aircraft Pull US Durable Goods Orders into June Rebound

Durable goods orders are up 3.4% for June after consecutive monthly drops, with orders for non-defense aircraft leading the way up 66.1%

WASHINGTON, D.C. — New orders for U.S. manufactured durable goods surged in June on the back of aircraft orders, rebounding from two consecutive declines, the Commerce Department reported Monday.

Durable goods orders advanced 3.4% in June, following a 2.1% decline in May and a 1.7% fall in April. Excluding the volatile transportation equipment sector, durable goods orders rose 0.8% in June.

New orders for transportation equipment leaped 8.9%. Orders for aircraft and parts were sharply higher, with non-defense planes soaring 66.1% and those for defense up 16.9%. Motor vehicle orders edged up 0.2%. Among other gainers were computers, up 9.1%, and electrical equipment and appliances, up 2.8%.

“Unfortunately, the June improvement in durable goods orders cannot hide the fact that 2015 is evolving into a weak year for U.S. manufacturing demand and output and at best a mixed year for the U.S. economy,” said Cliff Waldman, director of economic studies for the MAPI Foundation. “Key indicators of big-ticket strength are all down significantly on a year-over-year, year-to-date basis. Total new orders excluding transportation are 1.8% below the same period in 2014.

A number of sectors have been especially weak, Waldman said, including machinery (orders are are down by 9.1% compared with the first six months of 2014) and business equipment (spending is down by 3.4%).

Core capital orders — those for nondefense capital goods excluding aircraft — rose 0.9% after falling the previous two months.

Inventories rose 0.4% to $402.3 billion, their highest level since the data series was first published in 1992, the department noted.

“In spite of historically low interest rates, the economic environment for spending on long-lasting goods is unstable,” Waldman said. “Mixed growth and weak pricing power in the U.S., along with disturbing signals on the strength and stability of global goods demand, are creating hesitation on the part of business decision makers regarding investment commitments.

“There is enough growth in the U.S. economy to suggest that manufacturing output gains will be positive for the balance of 2015 and into 2016, but factory sector performance will likely be sluggish and volatile.”

Copyright Agence France-Presse, 2015

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