Industryweek 11582 Durable Goods

New Durable Goods Orders Fell Sharply in June on Reduced Aircraft Sales and Broader Weaknesses

July 29, 2016
Beyond automobiles, other segments with higher orders in June were communications equipment (up 6.0 percent) and (primary metals (up 0.8 percent).

The Census Bureau said that new durable goods orders fell sharply in June on reduced aircraft sales and broader weaknesses. New orders dropped from $229.0 billion in May to $219.8 billion in June, a decline of 4.0%. Moreover, on a year-over-year basis, sales have decreased by 6.4% since June 2015.

This highlights the ongoing challenges in the sector over the course of the past 12 months or more. With that said, much of the decline in activity in June came from lower nondefense and defense aircraft orders, down 58.8% and 7.4% for the month, respectively. Note that airplane orders can often be choppy from month-to-month, especially for nondefense sales, with transactions often centering around large trade shows.

Excluding transportation equipment, new orders for durable goods were off by 0.5% in June, with 3.6% decreases year-over-year. This indicated broader weaknesses in the sector, even if the declines were more modest than the headline number suggests.

Looking more closely at the various durable goods sectors, the data were mostly lower in June. The exceptions were motor vehicles and parts (up 2.6%) and electrical equipment and appliances (up 0.8%), both of which notched some gains. Those increases, however, were not enough to offset declining new orders aircraft sales, as noted above, and for computers and electronic products (down 2.2%), primary metals (down 1.3%), fabricated metal products (down 0.3%) and machinery (down 0.1%).

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ShopFloor is the blog of the National Association of Manufacturers (NAM).

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