U.S. Durable goods new orders and shipments up in June

*Durable goods orders rose 0.8% in June following a significantly upwardly revised May increase of 3.2% (from 2.3%) while durable goods shipments rose 1.0%, consistent with continued recovery in business production and investment spending (Chart 1). In the last six months since December 2020, durable goods orders have risen at a 17% annualized pace while shipments have risen 5.2% annualized, suggesting ongoing delays in supply chains. Even with these disruptions, the sizable increases in durable goods orders and shipments are expected to be reflected in a strong rise in business fixed investment in Q2, to be reported this Thursday.

*New orders for computers & electronic parts and electrical equipment, appliances and components continue to grow rapidly (both up 1.0% in June) and are well above their pre-pandemic levels (Chart 2). New orders for durable goods in motor vehicles and parts continue to face constraints.

*New orders for nondefense capital goods, a fairly reliable indicator of business investment spending for equipment and software, rose 0.5%, lifting it a solid 17% above its pre-pandemic level Chart 3).

*Shipments of durable goods rose 1.0% in June, but overall, shipments have not kept pace with new orders. Shipments of motor vehicle and parts durable goods dipped 0.5% and remain below pre-pandemic levels. Shipments of nondefense capital goods excluding aircraft continued to rise solidly with an increase of 0.6% in June following gains of 0.9% in each of the two preceding months (Chart 4).

Chart 1: Manufacturers’ – New Orders Durable Goods

Chart 2: New Orders for Computer and Electronic Parts vs. Electrical Equipment and Appliances

Chart 3: Manufacturers’ New Orders – Nondefense capital goods ex Aircraft

Chart 4: Manufacturers’ Shipments – Nondefense capital goods ex Aircraft

Mickey Levy, mickey.levy@berenberg-us.com

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