Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  New Orders for Durable Goods Rose 0.7% in May
Posted Under: Data Watch • Durable Goods • GDP • COVID-19
Supporting Image for Blog Post

 
Implications:  New orders for durable goods beat consensus expectations in May, with strength across almost all major categories.  With intense scrutiny of every data point on the strength of businesses and consumers, today's surprise to the upside combats concerns that the U.S. economy is already in (or teetering on the precipice of) a recession.  We still have a month to wait before we get our first look at second quarter GDP, and while growth will likely not prove stellar, we don't think it will decline, either.  The underlying details of the durables report showed orders activity was largely positive, with primary metals and industrial machinery the standouts.  Defense aircraft and auto orders rose in May but were partially offset by a decline in orders for commercial airplanes.  The transportation sector is notoriously volatile month-to-month, but stripping that out shows orders still grew 0.7% in May.  Beyond the rise in orders for primary metals (+3.1%) and machinery (+1.1%), orders grew at a healthy clip for computers and electronic products (+0.5%).  Orders for fabricated metals products were unchanged in May while electrical equipment saw orders tick down 0.9%.  Further back in the process, unfilled orders continue to rise, suggesting activity will remain positive as companies battle to keep up with demand that has far outpaced supply.  One of the most important pieces of today's report, shipments of "core" non-defense capital goods ex-aircraft (a key input for business investment in the calculation of GDP), rose 0.8% in May following a 0.8% increase in April.  If unchanged in June, these orders will be up at a 7.5% annualized pace in Q2 versus the Q1 average, and will provide a tailwind to second quarter GDP growth, which is currently tracking around 2% annualized growth following the Q1 GDP decline.  Orders for durable goods have recovered sharply, up 67.9% since the April 2020 bottom and now sit 15.4% above the pre-pandemic high set in February 2020.  We expect business investment will remain a tailwind for GDP growth throughout 2022 as companies continue to reopen and recover from the severe economic consequences of the COVID shutdowns. 

Click here for a PDF version
Posted on Monday, June 27, 2022 @ 2:07 PM • Post Link Share: 
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.
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 © 2022 All rights reserved.