Durable Goods Orders Drop in May

By at 27 June, 2019, 1:02 pm

by Raymond J. Keating-

According to the latest report from the U.S. Census Bureau, durable goods orders declined once again in May.

Durable goods orders declined by 1.3 percent in May, which came after a decline of 2.8 percent (revised down from a drop of 2.1 percent) in April. Orders have now declined in three of the last four months.

Transportation was the big negative in May, and has been in three of the last four months.

As for investment, capital goods orders fell of 3.3 percent in May, which followed a 4.8 percent decline in April. That included a drop of 2.3 percent in nondefense capital goods in May, after a 6.9 percent decline in April.

The change in nondefense capital goods excluding aircraft orders, which serves as a measure of private investment in equipment and software, was an increase of 0.4 percent, after April’s decline of 1.0 percent. That positive in this otherwise negative report was welcome.

Unfortunately, though, the trend in terms of nondefense capital goods excluding aircraft orders since August of last year has been stagnation or slight decline (see below), after a period of growth starting in early 2017.

Source: Federal Bank of St. Louis, FRED

On the policy front, it must be noted that the additional costs and uncertainties created by misguided trade policy  – that is, increased U.S. tariffs, retaliation by trading partners, and serious questions as to what lies ahead – is a negative in the investment/economy mix.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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