Economy

April Durable Goods Report Disappoints
Written by Sandy Williams
May 28, 2019
Trade tensions with China and a slower economy took a toll on durable goods orders in April. Orders fell 2.1 percent in April to a seasonally adjusted $248.4 billion, reported Commerce. April’s data includes a revision for March new orders to $506.2 billion from $508.5 billion.
Civilian aircraft led last month’s decline, plummeting 25 percent as Boeing failed to secure orders in March or April. Slower factory demand was also to blame, said economists.
Core capital goods, non-defense orders excluding aircraft, dipped 0.9 percent in April. The component is regarded as a predictor for future business investment and follows a downward revision to 0.3 percent for March, after an estimated rise of 1 percent.
“The April durable goods report was bad, particularly the details relating to capital goods orders and shipments. Coming on the heels of last week’s crummy April retail sales report, it suggests second-quarter activity growth is sharply downshifting from the first quarter pace,” wrote economists at J.P. Morgan.
Following Friday’s report, J.P. Morgan cut its estimate for second-quarter economic growth to 1 percent from 2.25 percent. An expected hike in interest rates by the Federal Reserve now seems less likely and trade tensions have dampened domestic sentiment, said economists.
Andrew Hunter, senior U.S. economist at Capital Economics, said an economic slowdown was anticipated. “We’ve been expecting the economy to slow over the course of this year for some time, mainly because of domestic factors,” he said. “But I think the downside risks have really increased over the past few weeks with the escalation of trade tensions.”
The April advance report on manufacturers’ shipments, inventories and orders issued by the U.S. Census Bureau follows:
New Orders
New orders for manufactured durable goods in April decreased $5.4 billion or 2.1 percent to $248.4 billion. This decrease, down two of the last three months, followed a 1.7 percent March increase. Excluding transportation, new orders were virtually unchanged. Excluding defense, new orders decreased 2.5 percent. Transportation equipment, also down two of the last three months, drove the decrease by $5.4 billion or 5.9 percent to $85.4 billion.
Shipments
Shipments of manufactured durable goods in April, down three of the last four months, decreased $4.0 billion or 1.6 percent to $253.3 billion. This followed a 0.5 percent March decrease. Transportation equipment, down four consecutive months, led the decrease by $3.7 billion or 4.1 percent to $85.8 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in April, down two of the last three months, decreased $0.7 billion or 0.1 percent to $1,179.1 billion. This followed a 0.1 percent March increase. Transportation equipment, also down two of the last three months, led the decrease by $0.4 billion or 0.1 percent to $810.6 billion.
Inventories
Inventories of manufactured durable goods in April, up nine of the last 10 months, increased $1.8 billion or 0.4 percent to $422.6 billion. This followed a 0.3 percent March increase. Transportation equipment, also up nine of the last 10 months, led the increase by $1.5 billion or 1.1 percent to $136.1 billion.
Capital Goods
Nondefense new orders for capital goods in April decreased $3.9 billion or 5.0 percent to $74.0 billion. Shipments decreased $2.4 billion or 3.0 percent to $75.9 billion. Unfilled orders decreased $2.0 billion or 0.3 percent to $705.3 billion. Inventories increased $0.9 billion or 0.5 percent to $185.9 billion. Defense new orders for capital goods in April increased $0.7 billion or 4.8 percent to $14.7 billion. Shipments increased $0.3 billion or 2.6 percent to $12.8 billion. Unfilled orders increased $1.9 billion or 1.2 percent to $159.2 billion. Inventories increased $0.1 billion or 0.6 percent to $23.4 billion.
Revised March Data
Revised seasonally adjusted March figures for all manufacturing industries, based on updated seasonal adjustment models, were: new orders, $503.5 billion (revised from $506.2 billion); shipments, $507.1 billion (revised from $508.5 billion); unfilled orders, $1,179.8 billion (revised from $1,181.1 billion) and total inventories, $691.3 billion (revised from $690.7 billion).

Sandy Williams
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