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By Wolf Richter for WOLF STREET.
New orders for durable goods in July jumped by 9.9% from June, the biggest month-to-month spike since May 2020, and more than reversing the big month-to-month drop in June, which had been driven by cancellations of orders for nondefense aircraft and parts that had hit beleaguered Boeing, which caused orders for Nondefense Aircraft & Parts to be negative for June (-$4.2 billion). But in July, orders for Nondefense Aircraft & Parts came in at $23.4 billion, which makes for a huge month-to-month gain. Aircraft orders are big enough to move the overall needle of durable goods orders.
New orders for durable goods excluding Nondefense Aircraft & Parts – so without Boeing – ticked down 0.6% in July from the record high in June, to $267 billion.
The three-month average (shown in the chart), which irons out the month-to-month squiggles, also edged down from the record high in June, and was up 1.2% from a year ago. Compared to the same period in 2019, orders in July were up 22%.
Note in the chart above:
The surge in orders coming out of the pandemic that then slowed in mid-2022 at much higher levels.
The slowdown in the 2nd half of 2023, and then the recovery this year to the record in June.
Excluding Defense and excluding Nondefense Aircraft & Parts, new orders dipped by 0.6% in July from the record in June. In terms of magnitude, defense orders averaged about 5.5% of total durable goods orders over the past 12 months.
So this is a measure of demand for US-made durable goods that excludes defense and it excludes the super-volatile civilian aircraft orders.
Without defense, the slowdown in the second half was milder and only spanned October through December, before the recovery started:
The order backlog surged during the pandemic, amid shortages of all kinds of components, including semiconductors. Most of these shortages have been resolved.
But for aircraft manufacturers – both Boeing in the US and Airbus in Europe – parts shortages persist, and both manufacturers have unfinished planes parked all over the place waiting for parts. The backlog for Nondefense Aircraft & Parts, at $647 billion, accounted for nearly half of total backlog.
The backlog without Nondefense Aircraft & Parts also shot up during the pandemic, but manufacturers began working down their backlog starting in mid-2023, when the backlog, at very high levels, began to dip.
But in June and July, the backlog grew again by a tad amid the growth in orders in the prior months:
Manufacturing orders by the largest categories of durable goods:
Orders for Motor Vehicles & Parts, after a slowdown in the 2nd half last year, rose in 2024 and hit new records. In July, the three-month average dipped from the record in June, to $63.6 billion, up by 1.9% year-over-year, and up 19% from the same period in 2019:
Orders for Machinery, after surging to a record out of the pandemic, has riding along a plateau starting in 2023, with slight slowdowns, followed by slight increases. The three-month average has been inching back up all year and in July reached $37.6 billion, a hair below the record, and up 17% from the same period in 2019.
Orders for Fabricated Metal Products have stalled at high levels. The three-month average in July remained at $36.2 billion for the fourth month in a row, down a hair from the record in November, and up 13% from the same period in 2019.
Orders for Computers & Electronic Products have continued to zigzag higher. In June, the three-month average hit a 14-year high of $25 billion and stayed there in July, up by 2.5% year-over-year and by 11% from the same period in 2019.
Note that over the past two decades, prices of computing power, memory, storage, etc. have collapsed as the technology has advanced. These orders are not adjusted for these price declines:
Orders for “other” durable goods, a broad catch-all category, has been plateauing at around $48 billion since late 2022, after the dramatic jump to new records coming out of the pandemic, up by 22% from the same period in 2019:
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The post Manufacturing (beyond Boeing) Not Dead: Orders Rose to New Highs in 2024, after a Little Dip in 2023, after Pandemic Boom appeared first on Energy News Beat.
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