Durable goods orders

Durable goods orders, a key economic indicator, are the new orders placed with domestic manufacturers for delivery of high-value factory hard goods. The US Census Bureau conducts its “Manufacturers’ Shipments, Inventories, and Orders” survey and publishes the durable goods orders data. A total of 3,000 American manufacturers from 92 different industries are surveyed for this report.

Will Tax Cut Tailwinds Continue to Help Durable Goods Orders?

May durable goods orders have decreased by 0.6%

Durable goods orders for May fell by $1.4 billion, or 0.6%, to $248.8 billion. A large decline in automobile parts orders and commercial aircraft was behind the decline in May. If we exclude the volatile transportation (IYT) sector, which includes aircraft (ITA) orders, core durable goods orders decreased by 0.3% in May, a minor decline as compared to the gains in the previous months.

All the major categories excluding aircraft orders declined with fabricated metal (XME) products and electrical equipment (SOXL), appliances, and components leading the list. Increased orders for machinery and communications somewhat reduced the negative impact on the total durable goods orders.

Will Tax Cut Tailwinds Continue to Help Durable Goods Orders?

Impact of tax cuts could drive orders higher

The overall trend for durable goods orders remains strong, and total orders rose 9.2% in the last 12 months. There could be further improvements in durable goods orders, especially for machinery orders, as industries (XLI) take advantage of full expensing and tax savings. The May report might have been below expectations, but this trend could be short-lived as the economy continues to expand.

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