Durable Goods Orders in the United States declined in June, though not as dramatically as forecasted. That would point to some possible stabilization within the vital manufacturing sector. New orders reflecting the total value of new purchase orders placed with manufacturers fell 9.3%. This drop is an improvement over the market’s expectation, which had predicted a 10.8% decline.
The most recent estimates from the US Census Bureau confirm the loss—the largest on record. With defense spending excluded, Durable Goods Orders declined 9.4%. Transportation equipment, the largest segment of the durable goods category, was the most influential contributor to this decrease. Orders for manufactured transportation equipment plunged a historic $32.6 billion, a full 22.4% collapse. Consequently, the overall for this category now comes to $113.0 billion.
Though the trend overall is certainly a downward one, the June numbers are encouraging news from just one month earlier. In May, Durable Goods Orders experienced a huge reversal. They reported a revised increase of 16.5%, a tick higher than the original increase of 16.4%. This volatility shows us that despite the current state of the market, the sky is not necessarily falling, and there are times of great growth that make up for downswings.
An economic analyst conversant with the new report pointed to the new orders data as encouraging. There are still weaknesses in some places, most acutely in transportation. They testified that overall, demand seems to be stronger than once thought.
In June, orders for machinery and electrical equipment helped complete the rosy picture. Sure, some industries are booming, but the national picture paints quite an opposite narrative. Durable Goods Orders are down for two of the past three months.
“Excluding transportation, new orders increased 0%. Excluding defense, new orders decreased 9.4%” – US Census Bureau press release
Either way, the significant decline in Durable Goods Orders—especially in transportation—can’t be helping any thoughts of consumer confidence or supply chain stability. The transportation sector, including land vehicles and aircraft, has been hit hard in the last few years. These range from supply chain disruptions to fluctuating demand. The dramatic drop in this area only underscores the continued vulnerabilities that manufacturers are facing and continue to wrestle with.
Industry experts are paying close attention to these trends as they calculate the larger economic impacts. Mixed signals from Durable Goods data could indicate that OEMs are moving into a new stage as they respond to shifting consumer preferences and address supply chain challenges.