Durable Goods Orders rose 6.3% in April to $296.3 billion. This net decrease means that October’s net is $19.9 billion less than the same month last year. On Tuesday, the U.S. Census Bureau released just such data. That was a surprise drop—much less bad than the market had been expecting, which was a 7.9% decline.
Transportation equipment orders had effect of pulling durable goods down by a whopping -0.68%. They decreased by $20.3 billion, or 17.1%, bringing total orders of this type down to $98.8 billion. This is a dramatic turnaround from the four straight monthly gains that transportation equipment experienced up until then.
Outside the transportation sector, new orders for durable goods were up 0.2% in April on the more closely watched month-to-month basis. When stripping out defense-related orders, new orders were down by 7.5%. The durable goods picture is all over the place. It is a mess underneath with an enormous increase in volatility in every category.
The U.S. Dollar Index remained flat, continuing to trade from a solid position above 99.00. This was the case in spite of the large overall decline in durable goods orders. At the time of this writing, the index was up 0.37% for the day, at 99.30.
In March, orders for durable goods were up 7.6%. This figure was revised down from a previous estimate of 9.2%. The difference between March’s robust growth and April’s total devastation highlights the uncertainty in the industry.
“Transportation equipment, also down following four consecutive monthly increases, drove the decrease, $20.3 billion, or 17.1% to $98.8 billion” – [press release]
The April decline illustrates the hard reality that manufacturers, especially car manufacturers, still continue to have trouble adjusting to changing market conditions and consumer tastes. While the transportation sector struggled, other areas showed resilience, as evidenced by the slight increase in orders when transportation is excluded.
“Excluding transportation, new orders increased 0.2%” – [press release]
Specifically, analysts are very interested to watch future trends in durable goods orders. For example, they are curious about how these trends will impact workforce development, economic competitiveness, and advanced manufacturing establishment. With mixed results from April, expect to hear calls for policy measures to stimulate demand and support key manufacturing sectors.