Durable Goods Orders Down 2.1%

July 27, 2011
Transportation equipment had the largest decrease, $4.2 billion or 8.5% to $45.4 billion.

New orders for manufactured durable goods in June decreased $4.0 billion or 2.1% to $192.0 billion, the U.S. Census Bureau announced on July 27. This decrease, down two of the last three months, followed a 1.9% May increase.

Transportation equipment, also down two of the last three months, had the largest decrease, $4.2 billion or 8.5% to $45.4 billion. This was due to nondefense aircraft and parts which decreased $2.8 billion. Excluding transportation, new orders increased 0.1%.

Excluding defense, new orders decreased 1.8%.

"Orders for nondefense capital goods excluding aircraft, an important indicator of overall business equipment trends, fell 0.4% in June but that was following a strong 1.7% increase the previous month," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI.

"The report shows that while business equipment activity may not be booming, it still remains relatively strong. Total durable goods orders are up 9.4% in the first half of 2011 versus the same period one year ago, and nondefense durable goods orders excluding aircraft have increased 11.8%.

"The reason for the solid performance is that so much capacity was shed, and so quickly, during the recession that even the current modest recovery in production creates bottlenecks and highlights the need to replace and upgrade machinery and equipment. Having strong profit gains and a tax incentive for accelerated depreciation motivates corporations to make long-term investments in their business operations. We continue to believe that business equipment growth will greatly exceed that of the pace of growth in the general economy."

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