The Economy

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).

Chad Moutray

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%).

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

About the Author

Chad Moutray | Chief Economist, National Association of Manufacturers

Chad Moutray is chief economist for the National Association of Manufacturers, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews and has appeared on various news outlets. In addition, he is the director of the Center for Manufacturing Research at The Manufacturing Institute, the workforce development and education partner of the NAM, where he leads efforts to produce thought leadership, data and analysis of relevance to business leaders in the sector.

Prior to joining the NAM, Mr. Moutray was the chief economist and director of economic research for the Office of Advocacy at the U.S. Small Business Administration from 2002 to 2010. In that role, he was responsible for researching the importance of entrepreneurship to the U.S. economy and highlighting various issues of importance to small business owners, policymakers and academics. In addition to discussing economic and policy trends, his personal research focused on the importance of educational attainment to both self-employment and economic growth.

Prior to working at the SBA, Mr. Moutray was the dean of the School of Business Administration at Robert Morris College in Chicago (now part of Roosevelt University). Under his leadership, the business school had rapid growth, both adding new programs and new campuses. He began the development of an M.B.A. program that began accepting students after his departure and created a business institute for students to work with local businesses on classroom projects and internships.

Mr. Moutray is the vice chair of the Conference of Business Economists, and he is a former board member of the National Association for Business Economics, where he is the co-chair of the Manufacturing Roundtable. He is also the former president and chairman of the National Economists Club, the local NABE chapter for Washington, D.C.

He holds a Ph.D. in economics from Southern Illinois University at Carbondale and bachelor’s and master’s degrees in economics from Eastern Illinois University. He is a Certified Business Economist™, where he was part of the initial graduating class in 2015.

In 2014, he received the Outstanding Graduate Alumni Award from EIU, and in 2015, he accepted the Alumnus Achievement Award from Lake Land College in Mattoon, Illinois, where he earned his associate degree in business administration. He serves on the external economics advisory board for the SIUC’s School of Analytics, Finance and Economics.