By McClatchy-Tribune News Service
From MCT
MINNEAPOLIS —
Weakness in many categories of built-to-last products drove orders for new U.S.-made durable goods down by 1 percent in June, the second straight monthly decline and the biggest drop in 10 months, the Commerce Department reported Wednesday.
Excluding a 2.4 percent decrease in transportation goods, orders fell 0.6 percent, the second decline in the past three months.
Economists surveyed by MarketWatch had expected 1.0 percent growth in durable-goods orders last month.
Orders for durable goods — expensive goods designed to last three years or more — had fallen 0.8 percent in May, revised down from an originally estimated drop of 0.6 percent.
Shipments of durable goods fell 0.3 percent in June after a 0.7 percent decrease in May, the government’s data showed. Inventories rose 0.9 percent, the sixth straight gain.
June’s decline in orders and shipments are consistent with other evidence pointing to a slowdown in manufacturing following a strong rebound earlier in the year.
Steven Ricchiuto, chief economist at Mizuho Securities, said the data fit with the economy losing upside momentum as the second quarter progressed.
This may show up in the second-quarter gross domestic product report due out Friday.
Economists expect second-quarter GDP to decelerate to a 2.5 percent annual growth rate from the 2.7 percent growth rate in the first three months of the year.
While the decrease in durable-goods orders for June was concentrated in transportation, declines were seen as well in other industrial sectors such as electronics, machinery and metals. A bright spot was computers, a sector in which rose sharply.
Orders for nondefense, nonaircraft capital goods rose 0.6 percent in June, significantly slower than the hefty 4.6 percent gain in May. Shipments of core capital equipment — the best monthly gauge of business investment — rose 0.2 percent.
Orders for transportation goods fell 2.4 percent, led by a 25.6 percent decline in civilian aircraft. This followed a 30.2 percent drop in aircraft orders in May. Economists had been on the lookout for a pickup in aircraft orders based on industry data.
Aerospace giant Boeing Co. reported 49 orders in June compared with five in May.
The government data often do not match private-sector reports. Some economists speculated that Boeing’s orders came in at the end of June and would be captured next month.
Many economists said the details of the durable goods report were better than the headline drop suggested.
“I read this as an OK report, right in line with a modestly growing economy,” wrote Joel Naroff, president of Naroff Economic Advisers.
“This is an environment where you need management capable of navigating continued soft growth. A slowly rising tide doesn’t lift all boats, but it does create opportunities for those who can figure out how to float and then sail in low waters,” Naroff said.
There were gains in many categories.
—Orders for motor vehicles and parts rose 2.5 percent in June.
—Orders for electrical equipment increased 3.7 percent.
—Orders for primary metals fell 2.0 percent. Orders for fabricated metals rose 1.2 percent.
—Orders for machinery fell 0.7 percent.
—Orders for electronics excluding semiconductors dropped 1.9 percent, despite a 2.5 percent increase in computers.
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