In May, new orders of durable goods increased by $26.6 billion to $194.4 billion in May, an increase of 15.8%. The sharp rise in new orders begins to erase losses generated by two months of crushing COVID-19 related losses: new orders fell by 18.1% in April, and only slightly less in March. Increases in orders were driven mainly by transportation equipment, which shot up 80.7% from $20.9 billion to $46.9 billion.
Shipments and unfilled orders of durable goods also increased in May following two months of decline, but lagged behind new orders. Durable goods shipments increased 4.4% to $198.5 billion following a decline, in April, of 18.6%. Shipments of transportation equipment rose 12.1% to 46.5 billion. Unfilled orders for manufactured durable goods only rose 0.1% to $1,108.6 billion, which follows a loss in April of 1.5%.
The market for capital goods also saw dramatic increases. Nondefense orders increased by 27.1% to $62.8 billion. Like with the rest of the durable goods market, shipments increased only slightly, and unfilled orders actually fell 0.1%. Defense orders of capital goods rose 19.9% to $13.3 billion.
The promising news for durable goods bolsters evidence that the market for manufacturing is improving following an April trough in the novel coronavirus recession. The data reflects factories which shut down in March or April and reopened in May, and builds on IHS Markit’s Flash U.S. Composite PMI report, published June 23: The IHS Markit Flash U.S. Manufacturing PMI rose to 49.6, a four-month high indicating very slow contraction. (A PMI of 50 indicates no change.)
