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Durable Goods Orders for June Fell for Second Month in a Row, Down 1.0% From May

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For the second month in a row, new orders for manufactured durable goods in June fell, posting a loss of $2.0 billion, or 1.0%, following a 0.8% decrease in May, the Commerce Department reported Wednesday, July 28.

Excluding the volatile transportation component, new orders decreased 0.6% compared to a 1.2% gain in May. Total orders came to $190.5 billion in June versus the revised figure of $192.5 billion in May, according to the department’s news release.

Excluding defense, new orders decreased 0.7%, matching May’s 0.7% decrease. Transportation equipment, down four of the last five months, saw the largest drop, $1.1 billion, or 2.4%, to $45.9 billion. This was due to a 25.6% decline in new orders for nondefense commercial aircraft and parts, for a decrease of $1.8 billion.

June’s decrease surprised analysts, whose consensus forecast was for a 1.0% rise in new orders for durable goods and a 0.4% rise in new orders excluding transport.

“The headline was pulled down by a baffling 25.6% drop in orders for civilian aircraft and parts. Yet Boeing reported 49 orders compared to five in May,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, New York, in an analyst note. “The numbers do not always move in line, but this is startling and we have to expect some sort of reconciliation in July. Ex-transport, half the decline was in the ‘other’ component, which includes lumber. Orders jumped in the spring as the tax credit boosted housing; this effect is now reversing.”

Motor vehicles, on the other hand, showed strength for the third month in a row, rising 2.5% in June after a 1.7% increase in May and a 2.0% increase in April.

Outside of transportation, volatility ruled the report. Major components were mixed yet on the negative side, even though the monthly trend is still headed up, reflecting the U.S. economy’s wobbly recovery. Compared to this time last year, overall new orders for durable goods in June were up 15.9%.

Declines in June were seen in primary metals, machinery, and computers & electronics, but fabricated metals and electrical equipment posted increases. Nondefense capital goods orders excluding aircraft in June rose 0.6%, following a 4.6% jump in May.

Read a story about durable goods orders in May from the archives of