The Census Bureau reported that new durable goods orders rose 4.2 percent in June, lifting it to an all-time high. The $244.5 billion is new orders in June surpassed the past high of $243.0 billion in December 2007. In essence, this brings durable goods sales back to where they were prior to the Great Recession. Yet, to be fair, the jump in new orders in June was mainly attributable to increased sales of aircraft. New orders in the transportation sector soared in the month, up from 12.8 percent. In addition to airplanes, auto sales were also higher, up 1.3 percent.
If you exclude transportation from the analysis, new durable goods orders were unchanged, which somewhat dampens the enthusiasm for reaching a new all-time high. It suggests that outside of aircraft and autos, there were some significant weaknesses in the broader sector. New durable goods excluding transportation have edged up just 1.0 percent since January, but more positively, they have risen 4.9 percent year-over-year. (Total new durable goods orders are up 10.9 percent over the past 12 months, illustrating just how much transportation sales have pushed the top-line figure higher.)
Looking at the other durable goods sectors, machinery was one of the larger non-transportation strengths in the new orders data, up 2.4 percent. There were also very small gains in sales for fabricated metal products and miscellaneous durable goods sectors, both up 0.1 percent. On the negative side, sales were lower in June for the following: computers and electronic products (down 2.6 percent), electrical equipment and appliances (down 1.8 percent), and primary metals (down 0.2 percent).
Meanwhile, shipments of durable goods were unchanged in June, pulling back from the 1.3 percent gain of May. Year-to-date shipments have risen 1.5 percent, with year-over-year growth of 3.4 percent. This suggests decent, but not robust, growth in shipments over the course of the past 12 months. With a flat shipments number, the sector breakdowns were mixed. Increased shipments in the primary metals (up 2.2 percent), motor vehicles (up 1.3 percent), and computers and electronic products (up 0.8 percent) sectors were offset by declines in the electrical equipment and appliances (down 1.0 percent), and machinery (down 1.2 percent) segments.
Chad Moutray is the chief economist, National Association of Manufacturers
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