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Durable Goods Orders Increase Again

Aug. 26, 2015
New orders jump 2.0% for July after an adjusted 4.1% June rise. Parts of the report are still cause for concern, though, including drops in metals and machinery.

American manufacturing bounced back a little more last month, at least according to the newest durable goods report from the U.S. Census Bureau, though not everything is perfect.

The report for July far surpassed forecasts, with new orders for domestic durable goods increasing 2.0% to a seasonally-adjusted $241.1 billion. Analysts had projected a 0.6% decline after a strong June. New orders increased 4.1% for June, upwardly revised from an initial report of 3.4%.

The report “should hopefully calm fears of a significant slowing in the U.S. economy,” MAPI Foundation director of economic studies Cliff Waldman said.

Beyond the headline numbers, though, concern remains. Transportation orders increased 4.7%, its second straight jump, but with that volatile segment excluded, new orders increased just 0.6%, following a 1.0% rise in June, and new orders for primary metals and fabricated metals dropped 1.8% and 1.3%, respectively. “Fortunately,” Waldman said, “strength in machinery orders suggests that key manufacturing supply chains have been seeing basically positively business activity.

“Comparisons with 2014 are a stark reminder of the struggles that the U.S. economy and U.S. manufacturing have experienced thus far in 2015,” Waldman said, noting that new orders excluding transportation are down 2% year-over-year, primary metals orders are down 7.9% and machinery orders are down 8.5%.

“Unfortunately, the escalated risks in the global economic and financial environment stand in the way of translating strong July durable goods spending into a strong short-term outlook,” he said. “The turmoil and confusion in China, weakness in a number of advanced and developing economies, and the recent disruption in global financial markets are all likely to negatively impact the confidence that is essential for positive activity in investment and big-ticket spending.”

Also of note, new orders for nondefense capital goods excluding aircraft increased 2.2%, up from a 1.4% increase in June, which indicates the drop in equipment spending in the oil sector has likely ended, Pantheon Macroeconomics chief economist Ian Shepherdson said.

"The rising underlying trend in non-oil spending is now becoming the dominant force again," Shepherdson said. "We can't rule out a renewed downshift in oil firms' spending, given the recent drop in oil prices, but it will not be of the same order of magnitude as the plunge over the past year."

About the Author

Matt LaWell | Staff Writer

Staff writer Matt LaWell explores news in manufacturing technology, covering the trends and developments in automation, robotics, digital tools and emerging technologies. He also reports on the best practices of the most successful high tech companies, including computer, electronics, and industrial machinery and equipment manufacturers.

Matt joined IndustryWeek in 2015 after six years at newspapers and magazines in West Virginia, North Carolina and Ohio, a season on the road with his wife writing about America and minor league baseball, and three years running a small business. He received his bachelor's degree in magazine journalism from Ohio University.

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