Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  New Orders For Durable Goods Declined 1.0% in May
Posted Under: Data Watch • Durable Goods
Supporting Image for Blog Post

Implications: New orders for durable goods slipped 1% in May. However, cutting through the monthly volatility, we see an acceleration in business investment. The US military ordered a boatload of submarines in April (yes, bad pun intended). As a result, overall orders increased 0.8% in April despite a decline of 0.8% outside the defense sector. Without this large order in May, the figures reversed, with overall orders declining 1%, but up 0.6% excluding the defense sector. As the table below shows, ex-defense orders are up at a 12.1% annual rate in the past three months versus a 2.2% gain in the past year. Orders for primary metals, fabricated metals, computers/electronics, and autos have all accelerated. Some of this acceleration is likely an offset to weakness we had this winter, but some of it also reflects a growing backlog of orders. Unfilled orders are up at a 9.7% annual rate in the past three months and up 7.9% versus a year ago. Shipments of "core" capital goods, which exclude defense and aircraft – a good proxy for business equipment investment – increased 0.4% in May, and are up at a 9.1% annual rate in the past three months. We are on the cusp of a large increase in business investment over the next couple of years. Consumer purchasing power is growing and debt ratios are low, leaving room for an upswing in appliances. Meanwhile, profit margins are still high, corporate balance sheets are loaded with cash, and capacity utilization is near long-term norms, leaving more room (and need) for business investment.

Click here for PDF version
Posted on Wednesday, June 25, 2014 @ 10:29 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.