Washington, D.C., USA: U.S. durable goods data for the month of May released today by the Census Bureau of the U.S. Department of Commerce shows a decline of 0.6% month to month. U.S. durable goods orders were expected to decline 1.0 percent in May, after falling 1.7 percent a month earlier.
Data for the prior month was revised higher, suggesting moderate growth in business spending on equipment in the second quarter. Other data on Wednesday showed a sharp narrowing in the goods trade deficit last month, and solid increases in retail and wholesale inventories, the latest indications that the economy was accelerating this quarter after losing some steam at the start of the year.
New orders for manufactured durable goods
New orders for manufactured durable goods in May decreased $1.4 billion or 0.6 percent to $248.8 billion. This decrease, down two consecutive months, followed a 1.0 percent April decrease. Excluding transportation, new orders decreased 0.3 percent. Excluding defense, new orders decreased 1.5 percent. Transportation equipment, also down two consecutive months, led the decrease, $0.9 billion or 1.0 percent to $86.1 billion.
Shipments of manufactured durable goods
Shipments of manufactured durable goods in May, down following nine consecutive monthly increases, decreased $0.2 billion or 0.1 percent to $246.9 billion. This followed a virtually unchanged April increase. Transportation equipment, down two consecutive months, drove the decrease, $0.5 billion or 0.6 percent to $82.1 billion.
Unfilled orders for manufactured durable goods
Unfilled orders for manufactured durable goods in May, up six of the last seven months, increased $5.9 billion or 0.5 percent to $1,160.6 billion. This followed a 0.6 percent April increase. Transportation equipment, also up six of the last seven months, led the increase, $4.0 billion or 0.5 percent to $800.3 billion.
Inventories of manufactured durable goods
Inventories of manufactured durable goods in May, up eighteen of the last nineteen months, increased $1.1billion or 0.3 percent to $403.0 billion. This followed a 0.3 percent April increase. Transportation equipment, up five of the last six months, led the increase $0.5 billion or 0.4 percent to $129.0 billion.
Nondefense new orders for capital goods
Nondefense new orders for capital goods in May decreased $1.6 billion or 2.0 percent to $77.1 billion. Shipments increased $2.3 billion or 3.0 percent to $76.4 billion. Unfilled orders increased $0.7 billion or 0.1 percent to $714.5 billion. Inventories increased $0.4 billion or 0.2 percent to $176.6 billion. Defense new orders for capital goods in May increased $1.7 billion or 15.1 percent to $13.3 billion. Shipments decreased $0.5 billion or 4.4 percent to $11.5 billion. Unfilled orders increased $1.8 billion or 1.2 percent to
$147.0 billion. Inventories increased $0.1 billion or 0.5 percent to $22.4 billion.
Revised seasonally adjusted April data for all manufacturing industries
Revised seasonally adjusted April figures for all manufacturing industries were: new orders, $496.0 billion (revised from $494.4 billion); shipments, $492.9 billion (revised from $492.8 billion); unfilled orders, $1,154.6 billion (revised from $1,153.1 billion) and total inventories, $666.9 billion (unchanged).
Figures in text are adjusted for seasonality, but not for inflation. Figures on new and unfilled orders exclude data for semiconductor manufacturing. “Virtually unchanged” indicates that the change is less than 0.05 percent for a percent increase or decrease.
The Manufacturers’ Shipments, Inventories, and Orders (M3) survey or the Durable Goods Orders Report
The Manufacturers’ Shipments, Inventories, and Orders (M3) survey or the Durable Goods Orders Report provides broad-based, monthly statistical data on economic conditions in the domestic manufacturing sector. The survey measures current industrial activity – change in the total value of new purchase orders placed with manufacturers for durable goods – and provides an indication of future business trends.
The data can be volatile and revisions via the Factory Orders report released about a week later are not uncommon. Moving averages should be used to identify long-term trends.
Durable goods are generally defined as higher-priced capital goods orders with a useful life of three years or more
Durable goods are defined as hard products (capital goods) having a life expectancy of three years or more years, such as automobiles, computers, appliances, airplanes, semiconductor equipment and turbines.
The report is issued monthly by the Census Bureau of the U.S. Department of Commerce.
‘Actual’ greater than ‘Forecast’ is good for the dollar and vice versa. A weak durable goods report will also generally lead to a decline on the bond market.
Core Durable Goods Orders Report
Core Durable Goods Orders report measures change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items.
Orders for aircraft are volatile and can severely distort the underlying trend. The Core data is therefore thought to be a better gauge of purchase order trends;
Why Markets Care About Durable Goods Orders Report
It is a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders.
A durable goods report showing an increase in orders is a sign that the economy is trending upwards. This can be a sign of gains in the stock market.
Durable goods orders tell investors what to expect from the manufacturing sector, a major component of the economy.
The Durable Goods Report gives more insight into the supply chain than most indicators, and can be especially useful in helping investors get a feel for earnings potential in the most represented industries: machinery, technology, manufacturing and transportation.
It provides forward-looking data such as inventory levels and new business, which count toward future earnings.