A Plunge in the April Durable Goods Data

By at 28 May, 2020, 2:01 pm

by Raymond J. Keating-

New orders for manufactured durable goods plunged in April for the second month in a row, according to the latest report from the U.S. Census Bureau.

New orders dropped by 17.2 percent in April, and that followed on a decline of 16.6 percent in March. As noted in the following chart, April durable goods new orders stood at the same level as when the U.S. was emerging from the Great Recession in late 2009.

Source: Federal Reserve Bank of St. Louis, FRED

Zeroing in on capital investment numbers, capital goods orders declined by 1.8 percent in April, after plunging by 29.6 percent in March. Interestingly, nondefense capital goods orders actually increased by 8.2 percent in April, but that was after a drop of 35.2 percent in March.

Finally, new orders for nondefense capital goods excluding aircraft – which serves as a measure of private investment in equipment and software – declined by 5.8 percent in April, after a decline of 1.1 percent in March.

None of this was good news, but at least when it came to certain measures of business investment, I guess one could argue that it could have been worse in April.

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


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