Durable Goods Orders Up for May

June 24, 2011
Transportation equipment up 5.8%.

New orders for manufactured durable goods increased $3.6 billion or 1.9% to $195.6 billion, the U.S. Census Bureau reported on June 24.

The increase, up two of the last three months, followed a 2.7% April decrease. Excluding transportation, new orders increased 0.6%. Excluding defense, new orders increased 1.9%.

Transportation equipment, also up two of the last three months, had the largest increase, $2.7 billion or 5.8% to $49.6 billion. This was due to nondefense aircraft and parts which increased $2.7 billion.

"The generally positive tenor to the May report on demand for long-lasting manufactured goods suggests that business equipment spending, while slowing, will remain a contributor to a sluggish economic recovery and a moderating manufacturing recovery," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI. "Excluding the volatile transportation component, new orders growth has been essentially zero during the past two months while still being 9.5% year-to-date over year-ago levels.

"The gains were modest across key sectors that feed the manufacturing supply chain, with fabricated metals demand being flat after two significant months of decline. New orders for non-defense capital goods excluding aircraft have been experiencing modest gains in recent months, suggesting that the emerging weakness in the U.S. and global economies is having some, but not yet major, impact on business expansion decisions.

"All told, these data square with other reports that show moderating manufacturing activity amidst disconcerting weakness in the U.S. economy. The factory sector will continue to grow faster than the U.S. economy as a whole. Manufacturing, however, cannot escape the risks borne of a troubled U.S. rebound and a world full of slowdowns and crises."

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