Durable Goods for June 2010 - New Orders down, -1%

The Durable Goods advance report for June 2010 showed a -1.0% decline in new orders. New orders of Capital goods dropped -2.3%. Non-defense capital goods dropped -1.6%, although minus defense and aircraft, core capital goods new orders increased 0.6%, a barely budge.

Last month's new orders were revised up, from -1.1% to -0.8%, and appears to be a seasonal adjustment from the report's numbers.



This month (original on Census.gov), shows non-defense commercial aircraft & parts, dropped -25.6%. Last month non-defense aircraft & parts declined -29.6%.. Even without air-o-planes (transportation), new orders declined -0.6%. Excluding defense, new orders decreased -0.7%.

Below is non-defense new orders minus the volatile aircraft. As one can see, there is no blaming volatile air-o-plane new orders this month for the drop in durable goods new orders.

Below is core capital goods, a leading indicator of future economic growth. Two things to note, core capital goods has not recovered to pre-recession levels and this month is an almost flat line of growth.



The below graph is core capital goods monthly percentage change. Core capital goods is the stuff manufacturers use to make more stuff or the means of production. Taking out the military and aircraft gives an indicator (or no) on production expansion. As one can see, core capital goods new orders is barely breathing.



There is also bad news on shipments, which contributes to the investment component of GDP.

Shipments of manufactured durable goods in June, down two consecutive months, decreased $0.7 billion or 0.3 percent to $195.0 billion. This followed a 0.7 percent
May decrease.

Computers and electronic products, down four of the last five months, had the largest decrease, $1.3 billion or 4.1 percent to $31.3 billion.

Shipments for capital goods was +0.6%, nondefense capital goods, +1.0% and core capital goods or capital goods minus defense and transportation, shipments were +2.0%.

Inventories increased as well, 6th month in a row, up 0.9%. The report claims transportation equipment had the largest inventory increase, but from the data contained in the report, the largest percentage increase was computers and electronics, 1.9%, with communications gear, a subset of this category, increasing 3.7%. The report must mean by volume to claim transportation has the largest increase in inventories.

Inventory changes are another component to U.S. GDP.

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