May-June Revision Ping-Pong Match Continues with Durable Goods

Durable goods orders rose 2.0% in June from a revised 2.3% decline in May.

The Advance Report on Durable Goods is the final economic report heading into tomorrow's advance GDP estimate for the second quarter.

New Orders

New orders for manufactured durable goods in June increased $4.9 billion or 2.0 percent to $246.0 billion, the U.S. Census Bureau announced today. This increase, up following two consecutive monthly decreases, followed a 2.3 percent May decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders increased 3.1 percent. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $3.0 billion or 3.8 percent to $80.5 billion.

Shipments

Shipments of manufactured durable goods in June, up two consecutive months, increased $3.5 billion or 1.4 percent to $258.2 billion. This followed a 0.5 percent May increase. Transportation equipment, also up two consecutive months, led the increase, $2.6 billion or 3.1 percent to $88.8 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in June, down four of the last five months, decreased $7.8 billion or 0.7 percent to $1,160.4 billion. This followed a 0.8 percent May decrease. Transportation equipment, also down four of the last five months, drove the decrease, $8.3 billion or 1.0 percent to $792.6 billion.

Inventories

Inventories of manufactured durable goods in June, up eleven of the last twelve months, increased $1.3 billion or 0.3 percent to $425.8 billion. This followed a 0.5 percent May increase. Transportation equipment, also up eleven of the last twelve months, led the increase, $1.1 billion or 0.8 percent to $139.6 billion.

Capital Goods

Nondefense new orders for capital goods in June increased $3.3 billion or 4.8 percent to $72.1 billion. Shipments increased $1.1 billion or 1.5 percent to $77.3 billion. Unfilled orders decreased $5.1 billion or 0.7 percent to $691.6 billion. Inventories increased $1.2 billion or 0.6 percent to $189.2 billion. Defense new orders for capital goods in June decreased $2.1 billion or 16.3 percent to $10.8 billion. Shipments decreased less than $0.1 billion or 0.3 percent to $13.0 billion. Unfilled orders decreased $2.2 billion or 1.4 percent to $157.1 billion. Inventories increased $0.3 billion or 1.3 percent to $23.8 billion.

May-June Reversals

The new housing report, trade report, and now the durable goods all reversed strongly from May to June, sometimes worse, sometimes better.

Durable goods rose 2.0% but that followed a decline of 2.3% in May and an even steeper 2.8% decline in April.

The Advance Trade report went the other way with May's rebound taken back in June as noted in Exports Down 2.7%, Imports Down 2.2%.

The New Home Sales report was also interesting as New Home Sales Bounce 7% in June from Hugely Negative Revisions.

Last month, I reported New Home Sales Plunge 35.9% in the West, 7.8% Overall, Prices Down 8.1%.

New sales were down a reported 6.9 percent in April and 7.8 percent in May. I have the revised numbers as -5.0% and -8.2% respectively. So a 7% rise is nowhere near as good as it looks on the surface.

GDP forecasting is even more of a crapshoot this month than normal.

Mike "Mish" Shedlock

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