Durable Goods Orders Fall, But Show Promise for Business Investment

Capital goods orders, nondefense excluding aircraft and an indicator for business investment, rose 0.4 percent from April’s sharp decline. The increase was the first since the beginning of the year and may signal stronger investment activity is on the horizon.

Commenting on the May report, MarketWatch wrote, “Import tariffs imposed by U.S. and China have hurt both countries and harmed the global economy by disrupting supply chains. Many firms are waiting to see if the trade dispute is resolved soon before committing themselves to big spending plans. The damage has been most pronounced in the export-heavy U.S. manufacturing sector, but the weakness now appears to be spreading to other parts of the economy. Economists warn the U.S. could suffer further if the trade fight drags on and the tariffs take full effect.”

The May advance report on manufacturers’ shipments, inventories and orders follows:

New Orders

New orders for manufactured durable goods in May decreased $3.3 billion or 1.3 percent to $243.4 billion. This decrease, down three of the last four months, followed a 2.8 percent April decrease. Excluding transportation, new orders increased 0.3 percent. Excluding defense, new orders decreased 0.6 percent. Transportation equipment, also down three of the last four months, drove the decrease by $3.9 billion or 4.6 percent to $80.0 billion.

Shipments

Shipments of manufactured durable goods in May, up following two consecutive monthly decreases, increased $0.9 billion or 0.4 percent to $254.1 billion. This followed a 1.6 percent April decrease. Machinery, up four of the last five months, led the increase by $0.4 billion or 1.1 percent to $33.4 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in May, down three of the last four months, decreased $6.4 billion or 0.5 percent to $1,171.2 billion. This followed a 0.2 percent April decrease. Transportation equipment, also down three of the last four months, led the decrease by $5.8 billion or 0.7 percent to $803.6 billion.

Inventories

Inventories of manufactured durable goods in May, up 10 of the last 11 months, increased $2.1 billion or 0.5 percent to $424.6 billion. This followed a 0.4 percent April increase. Transportation equipment, also up 10 of the last 11 months, drove the increase by $2.1 billion or 1.6 percent to $138.4 billion.

Capital Goods

Nondefense new orders for capital goods in May decreased $1.7 billion or 2.3 percent to $70.8 billion. Shipments increased $0.3 billion or 0.5 percent to $76.1 billion. Unfilled orders decreased $5.3 billion or 0.8 percent to $698.7 billion. Inventories increased $1.9 billion or 1.0 percent to $188.1 billion. Defense new orders for capital goods in May decreased $1.2 billion or 7.8 percent to $13.9 billion. Shipments increased $0.1 billion or 0.5 percent to $13.0 billion. Unfilled orders increased $0.9 billion or 0.5 percent to $160.3 billion. Inventories increased $0.1 billion or 0.4 percent to $23.5 billion.

Revised April Data

Revised seasonally adjusted April figures for all manufacturing industries were: new orders, $497.4 billion (revised from $499.3 billion); shipments, $503.9 billion (revised from $504.1 billion); unfilled orders, $1,177.6 billion (revised from $1,179.3 billion) and total inventories, $693.0 billion (revised from $692.9 billion).