By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — Weaker orders for airplanes and automobiles translated into a steeper-than-forecast 2.1% decline in durable-goods orders in June, the Commerce Department estimated Wednesday.
It was the second large drop in the past three months for durable-goods orders, raising fears that manufacturing is running out of steam after leading a tepid recovery over the past two years. Without a strong manufacturing sector, it is hard to see how forecasts of a strong second-half recovery can be realized.
The decline in orders in June followed a revised 1.9% rise in May and a 2.5% drop in April.
The decline was a surprise to ven the closest observers. Economists surveyed by MarketWatch had been forecasting a flat reading. See MarketWatch economic calendar.
Durable-goods orders have been swinging wildly this year in a sawtooth pattern.
The ex-transportation category has been much more stable. Durable-goods orders excluding automobiles and planes rose 0.1% in June after a 0.7% gain in May.
Details
Shipments of durable goods rose 0.5% in June for the second straight month.
Inventories of durable goods rose 0.4% in June. This is the 18th straight monthly gain in inventories.
Declining orders were seen in motor vehicles, civilian aircraft and military planes.
Outside of transportation, most sectors reported better bookings in June compared with May.
Of note, orders rose 2.1% for fabricated metals and 15.2% for computer equipment, the biggest gain since last December.
The monthly durable-goods report is highly volatile, in large part because of swings in demand for civilian aircraft and other extremely expensive items.
Orders for nondefense capital equipment goods excluding aircraft fell 0.4% in June after a 1.7% rise in May. Such core capital goods orders are considered the best gauge of capital spending by businesses.
Shipments of core capital goods -- a figure that feeds directly into calculations of gross domestic product -- rose 1.0% in June.
Orders for electronics, excluding semiconductors, rose 0.2% in June.
Orders for primary metals rose 1.0% in the month.
Orders for electrical equipment rose 0.4% in June.
Orders for defense capital goods fell 3.9%. Excluding defense, orders fell 1.8%.
Greg Robb is a senior reporter for MarketWatch in Washington.
