-by New Deal democrat
Per my post earlier this morning, I am going to delay until tomorrow reporting on motor vehicle sales and an in-depth look at personal spending, but let’s look at the second significant data release from this morning: manufacturers’ new durable goods orders for May.
To cut to the chase, this was another good month, at least on a nominal basis, continuing the string of positive, even somewhat Booming reports so far this year. While total orders declined -4.5% for the month - still within the range of noise - core capital goods orders increased 1.6% to another all-time high. And even with the decline, the headline number was only lower than one month ago and one month last year:
Headline orders are up about 25% from their pre-pandemic all-time high in 2018, while core capital goods orders are about 37% higher. And as the below YoY% comparison shows, the rate of increase has been accelerating for core capital goods orders in the past few months:
I need to caution again that these are nominal numbers. But even if I were to adjust for CPI, PPI, or PCE inflation, the three month average of orders would be higher YoY, and core capital goods would still be about 6% higher YoY.
Meanwhile, real manufacturing and trade industries sales were also updated this morning for April, showing a -0.9% decline monthly to the lowest level in four months. But real sales remain about 13% higher than before the pandemic:
On a YoY basis, real sales are up 1.3%:
This is among the poorest showings since the pandemic, eclipsed only by the 2022 manufacturing downturn and several months last year. Further, a historical look shows that before the Millennium, a 1.3% increase in real sales only happened shortly before or during recessions. Since the accession of China to normal trading status, it has been lower in 2002, the industrial recession of 2016, and the 2019 period that had some pre-recessionary characteristics as well:
Keep in mind this is for April, while the durable and capital goods release was for May. Further keep in mind that new orders are a forward-looking, short leading indicator, while real sales are a coincident indicator. In other words, the main import of all the data remains positive for the manufacturing sector.
