US April durable goods up 0.8% but solely due to military buys

WASHINGTON (ICIS)–US orders for durable goods rose marginally by 0.8% in April from March, the Commerce Department said on Tuesday, but the gain was wholly due to federal purchases of warplanes, without which overall sales were down by 0.8%.

In its monthly report, the department said that new orders for durable goods rose last month by $1.9bn or 0.8% to $239.9bn, marking the third consecutive month of gains.

However, the April gain was much lower than the upwardly revised 3.6% jump seen in March.

In addition, the department noted that all of April’s gain could be attributed to a 13.1% advance in orders for military aircraft and parts.

Absent those warplane sales, durable goods orders last month were off by 0.8%, including a nearly 3% decline in demand for machinery, a 5.5% drop in orders for communications gear and a 1% slip in orders for automobiles.

One exception was a 7% rise in orders for computers.

Transportation orders – a category that includes both military and civilian aircraft – often are separated from the overall durable goods data because aviation purchases frequently are made in multiple-plane batches.

In any given month those sales or their lack can disproportionately affect the big picture.

Durable goods are manufactured products meant to last three years or more and include such items as automobiles, appliances, transportation and manufacturing equipment. 

Many durable goods, such as computers and automobiles, are major downstream markets for chemicals and chemicals-based products used in manufacturing processes or as end-product components.

The department also said that unfilled orders for durable goods rose by $10.4bn or 1% in April from March to $1,081bn, the 12th monthly advance in the last 13 months.

Inventories of produced but unsold durable goods rose by a narrow $300m, or 0.1%, to $393.3bn, also marking the 12th monthly advance in 13 months.

US durable goods orders and inventories*

r: revised  *seasonally adjusted

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy