Durable Goods Orders Rebound From Steep Plunge

Mish

Durable goods orders rose 15.8% in May following a revised 18.1% plunge in April.

After two record declines, the Advance Durable Goods report shows a 15.8% jump in May.

New Orders 

  • New orders for manufactured durable goods in May increased $26.6 billion or 15.8% to $194.4 billion.
  • Excluding transportation, new orders increased 4.0%. 
  • Excluding defense, new orders increased 15.5%. 
  • Transportation equipment led the increase, $20.9 billion or 80.7 percent to $46.9 billion.

Shipments 

  • Shipments of manufactured durable goods in May, up following two consecutive monthly decreases, increased $8.4 billion or 4.4 percent to $198.5 billion. 
  • This followed an 18.6 percent April decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $5.0 billion or 12.1 percent to $46.5 billion.  

Inventories

  • Inventories of manufactured durable goods in May, up three consecutive months, increased $0.3 billion or  0.1% to $425.1 billion. 
  • This followed a virtually unchanged April increase. Transportation equipment, up twenty-two of the last twenty-three months, drove the increase, $1.3 billion or 0.9% to $144.1 billion. 

Year-to-Date New Orders vs 2019

  • Total: -13.6%
  • Excluding Transportation: -4.0%
  • Excluding Defense: -14.8%
  • Manufacturing With Unfilled Orders: -11.1%
  • Motor Vehicles and Parts: -28.6%
  • Core Capital Goods: -17.4%

Year-to-Date Shipments vs 2019

  • Total Shipments: -11.3%
  • Excluding Transportation: -3.7%
  • Excluding Defense: -12.0%
  • Manufacturing With Unfilled Orders: -8.1%
  • Motor Vehicles and Parts: -28.6%
  • Core Capital Goods: -8.4%

Nondefense capital goods, known as core capital goods, are indicators of manufacturing capacity expansion.

The rebound is nice but the year-to-date numbers are a disaster.

Mish

Comments (4)
No. 1-4
Tony Bennett
Tony Bennett

"After two record declines, the Advance Durable Goods report shows a 15.8% jump in May."

...

First thing first. April and March revised lower.

The 15.8% jump in context:

seasonally adjusted total durable orders

May 2018 .... $246.483 billion

May 2019 .... $236.720 billion

May 2020 .... $194.419 billion

Tony Bennett
Tony Bennett

"Motor Vehicles and Parts: -28.6%"

...

The manufacturers are getting desperate. Yesterday saw cable ad for Mazda - 72 months @ 0.0% + no payments for first 3 months.

Six000mileyear
Six000mileyear

Durable goods orders are still down 20% from the start of the April/May drops. Given the number of people continuing to collect unemployment, furlough, missed debt/rent payments, and salary cuts; I would say the economy's potential is no more than 90% of that before COVID hit. That means the recovery will be a very short-lived, V-shape.

Rbm
Rbm

Well if you look at it as a v is one half of a w guess everyones right.


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