The U.S. Department of Commerce reported on Friday that July’s reading on durable goods contracted by 6.8% to $229.2 billion. The consensus estimate from Bloomberg called for a drop of 5.8%, but on top of this reading came a revision for June to up 6.4% ($236.4 billion) from the preliminary 6.5% reading.
Orders for durable goods excluding transportation were up by 0.5%, ahead of Bloomberg’s consensus estimate for a 0.4% gain. June’s reading was revised a tad lower to a gain of 0.1% from an uptick of 0.2% reported on a preliminary basis. That ex-transportation figure has now been up for five of the past six reports.
Orders for commercial airplanes tumbled from 184 in June to just 22 in July. The drop was almost entirely due to the burst of orders received by Boeing at June’s Paris Air Show.
While transportation orders are larger in size than most durable goods orders, the variations in orders on airplanes can greatly skew this monthly reading.
There is a core capital goods reading that came in with a month-over-month gain of 0.4%, just under the broader consensus for a gain of 0.5%. Still, the June core reading was flat rather than a dip of 0.1% expected reading that had been reported on a preliminary basis.
There were some positive readings inside the July report. There was a 1.6% gain in computer and electronic product orders. Defense aircraft parts posted a 47.8% gain to $5.5 billion.
Inventories of manufactured durable goods rose 0.3% to $398.8 billion in July, and that is now up 12 of the past 13 months. There had been a 0.5% gain in June. Transportation equipment led the inventory increase with a 0.5% gain to $129.6 billion.
Nondefense new orders for capital goods decreased by $17.1 billion (down 20.2%) to $67.5 billion in July. Shipments increased by $1.4 billion (2.0%) to $72.6 billion and unfilled orders decreased by $5 billion (0.7%) to $704.5 billion.
Each monthly durable goods report is subject to revision, and there are times that those revisions can be significant. Each of these Commerce Department reports is based on a panel of approximately 5,000 reporting units that represent approximately 3,100 companies from the manufacturing sector.