Jump in Durable Goods Orders Buoyed by Aircraft Sales
The National Association of Manufacturers said the Census Bureau’s recent report on new durable goods orders rose 4.2% in June, lifting it to an all-time high.
NAM said the $244.5 billion in new orders in June surpassed the past high of $243.0 billion in December 2007. In essence, this brings durable goods sales back to where they were prior to the Great Recession. Yet, the jump in new orders in June was mainly attributable to increased aircraft sales. New orders in the transportation sector soared during the month, up 12.8%. In addition to airplanes, auto sales were also higher, up 1.3%.
NAM noted that if you exclude transportation from the analysis, new durable goods orders were unchanged, which somewhat dampens the enthusiasm for reaching a new all-time high. It suggests that outside of aircraft and autos, the broader sector experienced some significant weaknesses. New durable goods excluding transportation have edged up just 1.0% since January, but more positively, they have risen 4.9% year-over-year. (Total new durable goods orders are up 10.9% over the past 12 months, illustrating how much transportation sales have pushed the top-line figure higher.)
Machinery was one of the larger non-transportation strengths in the new orders data, up 2.4%. Fabricated metal products and miscellaneous durable goods sectors also saw small gains, both up 0.1%. On the negative side, sales were lower for computers and electronics (down 2.6%), electrical equipment and appliances (down 1.8%) and primary metals (down 0.2%).
Meanwhile, durable goods shipments were unchanged in June, pulling back from May’s 1.3% gain. Shipments have risen 1.5% year-to-date, with year-over-year growth of 3.4%. This suggests decent, but not robust, growth over the past 12 months. With a flat shipments number, sector breakdowns were mixed. Declines in machinery (down 1.2%) and electrical equipment and appliances (down 1.0%) offset gains in primary metals (up 2.2%), motor vehicles (up 1.3%) and computers and electronics (up 0.8%).
For the most part, manufacturing activity continues to improve from weaknesses during the spring. The Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) increased from 51.9 in June to 53.2 in July, suggesting modest growth overall and increases in new orders, output and employment. This included export sales, which contracted in June and have been slow so far in 2013.
To read the National Association of Manufacturers news release click here.