Orders for durable goods drop sharply as demand wanes

New orders for durable goods (those items lasting at least three years), fell sharply in July with a drop in demand for commercial aircraft, computers, and electrical equipment. According to the Commerce Department, durable goods orders fell 7.3% in July, the steepest drop in nearly a year. Excluding the transportation sector, orders fell just 0.6%.

Shipments of manufactured durable goods in July, down three of the last four months, decreased $0.8 billion or 0.3% to $228.8 billion, following a 0.1% June decrease, said the DOC report. Computer and electronics products, also down three of the last four months, drove the decrease, $0.9 billion or 3.2% to $26.6 billion, following a 1.1% June increase.
   
Unfilled orders for manufactured durable goods in July, up five of the last six months, increased $4.4 billion or 0.4% to $1,034.3 billion, to the highest level since the series was first published on a NAICS basis in 1992. This followed a 2.1% June increase. Computers and electronic products led the increase, $1.2 billion or 0.9% to $135.9.
   
Inventories of manufactured durable goods in July, up three of the last four months, increased $1.3 billion or 0.4% to $379.1 billion, the highest level since the series was first published on a NAICS basis, and followed a 0.2% June increase. Transportation equipment, up 14 of the last 15 months, led the increase, $0.7 billion or 0.6% to $117.1 billion.
   
Nondefense new orders for capital goods in July decreased $14.2 billion or 15.4% to $78.0 billion. Shipments decreased $1.0 billion or 1.4% to $73.6 billion. Unfilled orders increased $4.4 billion or 0.7% to $610.2 billion. Inventories increased $0.6 billion to $171.3 billion.
   
Defense new orders for capital goods in July decreased $2.6 billion or 21.7% to $9.2 billion. Shipments decreased $0.6 billion or 5.9% to $9.4 billion. Unfilled orders decreased $0.2 billion or 0.1% to $169.6 billion. Inventories increased $0.1 billion or 0.3% to $23.1 billion.

What does this mean for processors?
You can extrapolate this information to mean that ‘summer slump’ was in full swing in July, and August probably won’t look a whole lot better. Those are the two months when many large factories close for maintenance and repairs, and employees take vacations. Transportation, excluding aircraft, looks pretty good as the automotive sector is anticipating increased vehicle production through 2014.

It would also appear that there are orders on the books for many durable goods, and current inventories are up, but until sales pick up, new orders won’t be increasing. However, with Christmas just around the corner, hope springs eternal.

Comments (0)

Please log in or to post comments.
  • Oldest First
  • Newest First
Loading Comments...