Durable Goods Orders Fall Amid Steep Drop In Transportation Equipment Orders

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With orders for transportation equipment showing a substantial decline, the Commerce Department released a report on Wednesday showing that orders for manufactured durable goods fell by much more than expected in the month of June.

The report showed that durable goods orders fell by 2.5 percent in June following a downwardly revised 1.3 percent increase in May. Economists had expected orders to fall by 0.6 percent compared to the 1.8 percent increase originally reported for the previous month.

A steep drop in orders for transportation equipment contributed to the bigger than expected decline, with transportation equipment orders falling by 12.8 percent in June following a 2.7 percent increase in the previous month.

The pullback by transportation equipment orders reflected a 38.5 percent decrease in orders for non-defense aircraft and parts as well as 1.0 percent drop in orders for motor vehicles and parts, which more than offset a 30.1 percent increase in orders for defense aircraft and parts.

Excluding the drop in orders for transportation equipment, orders for durable goods actually rose 1.1 percent in June compared to a 0.8 percent increase in May. The increase surprised economists, who had expected ex-transportation orders to come in unchanged.

The growth in ex-transportation orders came was partly due to notable increases in orders for primary metals and machinery, which rose by 8.9 percent and 4.4 percent, respectively.

Meanwhile, the Commerce Department said that shipments of durable goods edged down 0.2 percent in June following a revised 2.6 percent decrease in May.

With the continued decrease, shipments of durable goods fell for the eleventh consecutive month, marking the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992.

Inventories of durable goods fell for the sixth consecutive month, falling by 0.9 percent in June following a 1.1 percent decrease in May.

Meanwhile, the report showed that orders for non-defense capital goods, excluding aircraft, which is seen as an indicator of business spending, rose 1.4 percent in June after jumping 4.3 percent in the previous month.

Next Wednesday, the Commerce Department is due to release its report on factory orders in the month of June, which includes orders for both durable and non-durable goods.

With orders for transportation equipment showing a substantial decline, the Commerce Department released a report on Wednesday showing that orders for manufactured durable goods fell by much more than expected in the month of June. The report showed that durable goods orders fell by 2.5 percent in June following a downwardly revised 1.3 percent increase in May. Economists had expected orders to fall by 0.6 percent compared to the 1.8 percent increase originally reported for the previous month. (Market News Provided by RTTNews)