Advanced Durable Goods Orders: The U.S. Census Bureau reported that; new orders for durable goods orders increased by 15.8% month on month, (m/m) in May, following the 18.8% decrease in April. The always-volatile nondefense aircraft orders, down 121.7% 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 increased by 25.8% for the month and down 13.6% on a year on year, (y/y) basis. Transportation orders increased by 80.7% and were down 31.6% vs a year ago. Leaving out transportation business, orders increased 4.0% m/m and decreased 4.0%y/y.

Motor vehicles and parts were up 27.5% m/m as orders decrease 28.6% y/y. Concern was expressed that steel and aluminum tariffs may add risk to further growth. Orders for primary metal were up 9.1% m/m and have decreased 11.1% y/y.

Durable goods shipments increased 4.4% m/m and were lower by 11.3% on a year on year comparison.  Capital goods shipments decreased by 0.4% m/m and down 7.0% y/y.

Figure 1 shows the history of DG orders from 2010 to present. New orders totaled $194.4M in May (3MMA), a 23.5% 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.