Durable Goods Orders Fall in May, Weighed Down by Aircraft, Transportation

The Commerce Department said Monday that durable goods orders in the U.S. fell as aircraft and the transportation component weighed down in May. The median economic forecast called for a -0.4%, but orders for long-lasting manufacturing goods fell 1.1% from April to a seasonally adjusted $228.18 billion in May.

The drop was fueled by large declines in two volatile components, a 30.8% drop in military-aircraft orders and a 11.7% drop in orders for civilian airplanes and parts. Excluding transportation, durable goods orders rose 0.1%. Excluding defense products, orders were down 0.6% from last month.

While the latest government report is weak, factory demand and activity overall has gained strength in 2017. Durable-goods orders rose 2.8% in the first five months of 2017 compared with a year earlier.

Orders for non-defense capital goods excluding aircraft–which serves as a closely-watched proxy for business investment in new equipment–fell 0.2% in May. But it was up 2.3% year-to-date.

The report also wasn’t without positives, including a strong 0.6% gain in machinery orders and a stronger 1.2% gain in orders for vehicles. The latter follows a 0.5% increase in the prior month. Shipments of vehicles are on a similar upward trend.