Durable Goods Orders – Decline in Airline and Defense Masks Improvement
Orders of durable goods fell 2.5% in June after a 1.3% increase in May. The 38.5% drop in orders of aircraft and a 28.3% decline in bookings of defense equipment resulted in the overall plunge in orders of durable goods. Orders of non-defense capital goods excluding aircraft increased 1.4% following a 4.3% gain in the prior month.
Orders of machinery (+4.4%), primary metals (+8.9%), and electrical equipment and appliances advanced (+0.9%) in June.
Inflation adjusted shipments of non-defense capital goods excluding aircraft fell at an annual rate of 16.1% in the second quarter vs. a 36.3% drop in the first quarter. Shipments of non-defense capital goods are the input used to compute equipment and software spending in the GDP report. Based on the information from this report, capital spending is most likely to decline in the second quarter, albeit at a noticeably smaller pace than the first quarter.
