Industryweek 34820 Manufacturing Factory Worker 1540

US Business-Equipment Orders Gain Masked by Shipments Slump

Aug. 26, 2019
The slump in sales of equipment suggests American businesses remained cautious about capital spending.

U.S. factory orders for business equipment increased in July for a third month, at the same time shipments of such goods plunged the most since October 2016 in a sign that capital investment remains tepid in light of slower global growth and a ratcheting up of trade tensions.

Bookings for non-military capital goods orders excluding aircraft -- a proxy for business investment -- rose 0.4% after a downwardly revised 0.9% gain in the prior month, according to Commerce Department figures Monday.

Shipments of non-defense capital goods excluding aircraft -- a measure used in GDP calculations -- dropped 0.7% after no change a month earlier.

The broader measure of bookings for all durable goods, or items meant to last at least three years, jumped 2.1%, buoyed by a surge in civilian aircraft orders.

Key Insights

The slump in sales of equipment suggests American businesses remained cautious about capital spending ahead of this month’s escalation of the U.S.-China trade war. Uncertain trade policy, weaker global manufacturing and recession fears may continue to limit investment in the coming months.

The report compares with recent data that signal further cracks in the manufacturing sector. The IHS Markit Purchasing Managers’ Index posted its first contraction since 2009, and the Kansas City Federal Reserve's factory gauge shrank.

Nonresidential investment, which includes corporate outlays for structures, weighed on economic growth in the second quarter for the first time since 2016. Weaker demand indicates a persistent headwind for the economy.

The headline durable-goods figure reflects a 47.8% jump in orders for civilian aircraft. Boeing Co. said earlier this month it received 31 orders in July, the most in four months.

The median forecast in the Bloomberg survey called for no change in orders for non-defense capital goods excluding aircraft from a month earlier after a previously reported 1.5% June increase. The median estimate for bookings of all durable goods was for a 1.2% advance.

Excluding transportation-equipment demand, which tends to be volatile, orders fell 0.4%. Defense capital-goods orders rose 14.4%.

Durable goods inventories increased 0.4% following a 0.3% gain.

By Reade Pickert, with assistance from Chris Middleton

Popular Sponsored Recommendations

Gain a competitive edge with real-world lessons on private 5G networks

Nov. 16, 2023
The use of private networks in manufacturing applications is rapidly growing. In this paper, we present valuable insights and lessons learned from the field with the goal of enhancing...

You Cannot Stay Competitive by Bolting New Technologies to a Legacy ERP

Oct. 20, 2023
Read this white paper to understand the benefits of shifting to a next-generation ERP system as part of a DOP.

What Is Your Smart Factory IQ?

Sept. 24, 2023
It’s time to put Smart, data-driven manufacturing operations to the test. In this comprehensive whitepaper we show you how to determine the Artificial Intelligence Quotient (AIQ...

Discover How an Eye Tracking Study Improves Training Procedures

Oct. 29, 2023
Did you know that your training processes can be streamlined by visualizing and analyzing key skills within your employee base? Find out how we use eye tracking to capture advanced...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!