On August 26, local time, the US Census Bureau released its advance report on July manufacturers' shipments, inventories, and orders for durable goods. On a seasonally adjusted basis, new orders climbed by $3.6 billion, or 1.1%, compared to June, reaching a total of $339.3 billion. The June figure was revised upward to show a 0.5% increase. Excluding defense, new orders advanced by 1.3%, while the gain narrowed to 0.4% when transportation equipment was stripped out. Market forecasts had generally anticipated a 0.5% rise in overall orders. Durable goods are manufactured products expected to last three years or more, encompassing items such as aircraft, machinery, automobiles, and computers. Over the past five months, this indicator has risen on four occasions. The July uptick was primarily driven by the transportation equipment sector, which had previously seen declines for two consecutive months.
Total orders up 1.1%, up 1.3% excluding defense, and up 0.4% excluding transportation
The Census Bureau released three sets of figures simultaneously. Total new orders reached $339.3 billion, surpassing the June level of $335.7 billion. Excluding defense, orders were approximately $312.7 billion, a 1.3% increase. Excluding transportation equipment, orders stood at roughly $223.1 billion, a modest 0.4% gain. For the latter two categories, market expectations were for a 0.6% rise excluding transportation and a 0.9% increase in core capital goods (non-defense, excluding aircraft). The actual readings were 0.4% and 0.2%, respectively, both falling short of projections. The better-than-expected performance in total orders, which exceeded the 0.5% forecast, was largely attributed to the transportation segment, particularly aircraft.
Shipments also moved higher. July durable goods shipments increased by $3.2 billion, or 1.0%, to $334.7 billion, again led by transportation equipment. Unfilled orders grew by $9.6 billion, up 0.6%, to $1.5999 trillion. Inventories rose 0.4% to $604.4 billion.
Transportation equipment up 2.3%, civilian aircraft up 12.7%
New orders for transportation equipment increased by $2.6 billion, or 2.3%, reaching $116.2 billion. Within this category, non-defense aircraft and parts surged 12.7%, defense aircraft and parts rose 4.9%, and motor vehicles and parts gained 0.9%. During the Farnborough International Airshow in the UK in July, aircraft manufacturers secured a batch of new orders, which aligns with the sharp rise in civilian aircraft figures. Other industries showed mixed results. Overall new orders for capital goods rose 1.3%, primary metals increased 1.5%, and machinery advanced 1.2%. Computers and electronic products fell 1.1%, marking the first decline in three months, while electrical equipment, appliances, and components dropped 0.4%, the first decrease in five months.
Core capital goods rise only 0.2%
To gauge business spending on equipment, market analysts commonly track non-defense capital goods excluding aircraft. In July, this group rose just 0.2%; after revisions, June showed a 1.7% increase and May posted a 1.9% gain. Shipments for this same category advanced 1.4%. When aircraft are included, new orders for non-defense capital goods increased 2.0% to $99.1 billion. The August 26 release represents advance estimates, and the full factory orders report will incorporate revisions. The next durable goods advance report is scheduled for September 25, covering August data. Aircraft orders are subject to significant monthly volatility, and total orders can be swayed by a few large transactions. Excluding aircraft, core capital goods exhibit less fluctuation, yet the July growth rate has already shown a notable deceleration.