Durable Goods Orders Trending Positively

By at 25 July, 2019, 10:23 pm


by Raymond J. Keating-

After declines in the two previous months and in three of the last four months, durable goods orders moved up in June, according to the latest report from the U.S. Census Bureau.

Durable goods orders increased by 2 percent in June, which came after drop-offs of 2.3 percent in many and 2.8 percent in April.

The Census Bureau reported, “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…” – up by 3.8 percent.

As for investment, capital goods orders increased by 1.4 percent, but this came after major declines of 6.5 percent in May and 4.8 percent in April. These changes included a 4.8 percent increase in nondefense capital goods in June, after declines of 4.9 percent in May and 7.0 percent in April.

It’s important to look at the change in nondefense capital goods excluding aircraft orders, since it serves as an indicator of private investment in equipment and software featured in GDP data. Nondefense capital goods excluding aircraft orders grew by 1.9 percent in June, after an increase of 0.3 percent in May and a decline of 1.1 percent in April.

The durable goods numbers from the past three months point to rather sluggish private investment during the second quarter of this year. We’ll see if the second quarter GDP numbers out on July 26 confirm this or not. A possible positive in these numbers from the durables goods report, however, is that improvement can be seen in each of the last two months. Hopefully, that trend will take hold and become more robust.


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


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