Economy

Durable Goods Boosted by Aircraft Orders in June

July 25, 2019

Durable goods orders rose 2 percent in June after two months of declines, surprising economists who expected a much softer increase. Orders increased to $246 billion from $241 billion in May. The rise was due primarily to commercial aircraft orders, which jumped 75.5 percent after two months of dismal results related to issues with Boeing’s 737 MAX aircraft. A 3.1 percent leap in motor vehicles and parts also contributed to June’s improvement.

Core capital goods, non-defense minus aircraft and a measure of future investment, appeared to bode well for manufacturing with a rise of 1.9 percent, but contradicted other manufacturing indices. Federal Reserve reports showed industrial production stalling in June and the ISM Manufacturing Index dipped to its lowest reading since October 2016.

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

New Orders

New orders for manufactured durable goods in June increased $4.9 billion or 2.0 percent to $246.0 billion. This increase, up following two consecutive monthly decreases, followed a 2.3 percent May decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders increased 3.1 percent. Transportation equipment, also up following two consecutive monthly decreases, led the increase by $3.0 billion or 3.8 percent to $80.5 billion.

Shipments

Shipments of manufactured durable goods in June, up two consecutive months, increased $3.5 billion or 1.4 percent to $258.2 billion. This followed a 0.5 percent May increase. Transportation equipment, also up two consecutive months, led the increase by $2.6 billion or 3.1 percent to $88.8 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in June, down four of the last five months, decreased $7.8 billion or 0.7 percent to $1,160.4 billion. This followed a 0.8 percent May decrease. Transportation equipment, also down four of the last five months, drove the decrease by $8.3 billion or 1.0 percent to $792.6 billion.

Inventories

Inventories of manufactured durable goods in June, up 11 of the last 12 months, increased $1.3 billion or 0.3 percent to $425.8 billion. This followed a 0.5 percent May increase. Transportation equipment, also up 11 of the last 12 months, led the increase by $1.1 billion or 0.8 percent to $139.6 billion.

Capital Goods

Nondefense new orders for capital goods in June increased $3.3 billion or 4.8 percent to $72.1 billion. Shipments increased $1.1 billion or 1.5 percent to $77.3 billion. Unfilled orders decreased $5.1 billion or 0.7 percent to $691.6 billion. Inventories increased $1.2 billion or 0.6 percent to $189.2 billion. Defense new orders for capital goods in June decreased $2.1 billion or 16.3 percent to $10.8 billion. Shipments decreased less than $0.1 billion or 0.3 percent to $13.0 billion. Unfilled orders decreased $2.2 billion or 1.4 percent to $157.1 billion. Inventories increased $0.3 billion or 1.3 percent to $23.8 billion.

Revised May Data

Revised seasonally adjusted May figures for all manufacturing industries were: new orders, $491.1 billion (revised from $493.6 billion); shipments, $504.7 billion (revised from $504.3 billion); unfilled orders, $1,168.2 billion (revised from $1,171.1 billion) and total inventories, $694.1 billion (unchanged).