Durable Goods

New orders for May Durable Goods unexpectedly rose both headline and ex transports. Headline rose 1.8% vs a forecasted drop of .9% while ex transports rose 1.1% vs an expected fall of .5%. The prior month was revised lower by a touch. Non defense capital goods ex aircraft, the pure cap ex component, rose a solid 4.8% but after drops in the two prior months and is still down 23.1% y/o/y. The headline # was boosted by a 68.1% rise in non defense aircraft orders which is a highly volatile category. Vehicle and parts orders fell 8.1% and are down 32% y/o/y and it’s the main group where a 2nd half inventory rebuild is expected to come from. The main support to the ex transport # was a 7.7% gain in machinery orders and a 2.2% rise in computers/electronics. Primary metals were little changed and electrical equipment orders fell 1.1%. One caveat, the inventory to shipments ratio rose to 1.90, the highest since ’92.

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