Canadian Plastics

Orders for big ticket manufactured goods in U.S. up 7.3% in June

The U.S. Commerce Department said that the June gain in durable goods orders follows an even bigger 15.1% increase in May.

July 27, 2020   Canadian Plastics

American orders for big-ticket manufactured goods rose a solid 7.3% in June, the second big monthly gain in the U.S. as manufacturing tries to reverse the slump triggered by the COVID-19 pandemic.

In a July 27 statement, the U.S. Commerce Department said that the June gain in durable goods orders, which was better than expected, followed an even bigger 15.1% increase in May. Those two increases came after sharp declines in March and April as factories shut down.

A closely watched gauge of business investment posted a strong 3.3% increase in June after a 1.6% rise in May.

Even as more and more factories resume operations, economists caution that manufacturing could slump again if surging cases in many parts of the country derail a broader economic rebound.

“The sugar rush from re-openings has now faded and a resurgence of domestic coronavirus cases, alongside very weak demand, supply chain disruptions…and high levels of uncertainty will weigh heavily on business investment,” said Oren Klachkin, the lead U.S. economist at Oxford Economics, in a prepared statement. “Risks to the recovery will remain heavily tilted to the downside so long as the health situation does not improve.”

The June increase was led by a 20% gain in the transportation sector as orders for cars, trucks and parts surged 85.7%. That figure captures the resumption of production by big automakers. Vehicle sales offset a big decline in orders for commercial aircraft as major airlines, operating at vastly reduced capacity, cancel orders for new planes from Boeing in waves.

Excluding the volatile transportation sector, orders for durable goods – defined as items expected to last at least three years – rose 3.3%, following a 3.6% gain in May.


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