Durable Goods Orders

Advanced Durable Goods Orders: The U.S. Census Bureau reported that new orders for durable goods orders increased by 14.9% month on month (m/m) in June, following the 4.2% increase in May. The always-volatile nondefense aircraft orders, down 462.3% y/y influenced this trend significantly.

The Advance Report on Durable Goods (DG), The M3 is based upon data reported from manufacturing establishments with $500 million or more in annual shipments. Units may be divisions of diversified large companies, large homogenous companies, or single-unit manufacturers in 89 industry categories.

Capital goods orders decreased by 16.4% for the month and down 14.4% on a year on year, (y/y) basis. Transportation orders increased by 20.0% and were down 31.1% vs a year ago. Leaving out transportation business, orders increased 3.3% m/m and decreased 3.8%y/y.

Motor vehicles and parts were up 85.7% m/m as orders decrease 25.5% y/y. Concern was expressed that steel and aluminum tariffs may add risk to further growth. Orders for primary metal were up 3.6% m/m and have decreased 10.7% y/y.

Durable goods shipments increased 14.9% m/m and were lower by 10.7% on a year on year comparison.  Capital goods shipments increased by 3.6% m/m and down 7.4% y/y.

Figure 1 shows the history of DG orders from 2010 to present. New orders totaled $227.1M in June (3MMA), a 16.1% decrease y/y.

At Gerdau, we routinely monitor durable goods orders since it provides a good read on the current health of the US manufacturing economy and its probable short-run future.

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