US transportation sector drives new orders for durable goods 7.3% higherOn July 28, 2020 by Thomas Belayneh
New orders for durable goods rose 7.3% to $206.9bn in June, driven by a surge in new orders for transportation equipment which increased 20% to $55.3bn.
Excluding transportation, however, revealed an increase of only 3.3%, which was lower than May’s figure of 3.6%.
New orders for capital goods disappointed, declining by 16.4% to $52.2bn, despite magnificent growth of 26.3% in the prior month. Taken together, the figures suggest a stalling recovery in manufacturing activity.
Durable Goods – Shipments and New Orders
While the growth in shipments of durable goods accelerated from 4.2% in May to 14.9% in June, this was overshadowed by the fall in the growth of new orders for capital goods, which decelerated from 15.1% in May to 7.3% in June.
Shipments of motor vehicles and parts was the fastest growing category in May, rising by 27.3% to $28.4bn. The sector continued its outperformance into June, rising 83.1% to $52bn, while the worst performer, computer and related products, fell 8.1% to $1.69bn.
Turning to new orders, nondefense aircraft and parts was the worst performer, swinging from $2.9bn new orders in May to $10.4bn worth of orders cancellations in June – in percentage terms, that’s a decrease of 462.3%!
The best performing category for new orders was motor vehicles and parts, which increased 85.7% to $52.8bn.
Capital Goods – Shipments and New Orders
Capital orders rose 3.6% to $78.4bn in June, after rising just 0.2% to $75.7bn in May. New orders for capital goods decreased, however, falling 16.5% to $63bn, following an increase of 26.3% in May.
Although when you look at new orders of capital goods excluding aircraft, there was instead an increase of 3.3% to $64.3bn, which represents an acceleration from the 1.6% growth in May.
Unfilled Orders and Total Inventories
Unfilled orders (order backlog) declined 1.4% to $1.092bn in June, which is welcome news as it remained flat in May.
Although, after remaining flat for the two prior months, inventories discouragingly increased marginally by 0.1% in June. Underlying the growth in inventories was nondefense capital goods, which rose 0.7% in June, following a 0.7% rise in May.
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