U.S. Durable-Goods Orders Fall After Transportation Plunge

Overview

• Durable-goods orders fell 4.5% in May to $332.1 billion, a decline driven almost entirely by a 14.0% plunge in transportation equipment.
• When transportation is excluded, core durable-goods orders rose about 1.3%, a cleaner signal of underlying business investment than the headline figure.
• Broader factory orders slipped 1.3% while shipments rose and firms added to backlog and stocks, with unfilled orders up 1.7% to $1.569 trillion and inventories up 0.3% to $959.1 billion.
• April’s durable-goods reading was revised up sharply to an 8.5% gain, making May look like a corrective pullback and leaving interpretation of the trend crucial for Federal Reserve policy choices.
• The data raises near-term uncertainty for manufacturers and investors because a sustained fall in core capital spending would slow hiring and equipment investment, so markets will watch upcoming monthly reports and core capital-goods series for clearer direction.