New Orders Falling, Inventories Building Up
The latest monthly data on U.S. manufacturers’ orders, shipments, and inventory shows that new orders for durable goods fell in July while inventories built up. Data shared by the U.S. Census Bureau reveals that new orders for manufactured durable goods—that is, non-perishable goods that can last up to at least three years—dropped by $16.7 billion in of July.
Total new orders amounted to $229.2 billion in July, which is down 6.8% from the prior month—the biggest drop in nearly three years. A decrease in new orders has been recorded in three of the past four months. Only in June did new orders post a gain (6.4%).
The most significant decline in new orders was for transportation equipment; $74.3 billion worth of orders were received in July, which is $17.4 billion less than in the previous month, accounting for a 19% decline. This category includes motor vehicles, civilian and defense aircraft, and their parts.
Only the defense aircraft category showed an increase in orders. In contrast, orders for non-defense aircraft slumped by a staggering 70.7%, while motor vehicle manufacturing orders also posted a decline of 1.2%.
Inventories of manufactured goods have been building up in 12 of the past 13 months, increasing by 0.3% in July.
The uncertainty surrounding America’s future fiscal policy may be playing a role in slowing down economic activity. Businesses have their fingers crossed in hopes that President Donald Trump will slash corporate taxes, letting them breathe easier. However, the continued delay in Trump’s promised tax cuts is hindering long-term corporate direction.
Meanwhile, the report by the U.S. Census Bureau reconciles with information that I recently shared about the United States’ slowing auto manufacturing industry, which is primarily due to a slowdown in auto sales. Likewise, my colleague Stephen Karmazyn updated our readers about the country’s largest civilian aircraft manufacturer, Boeing Co, as it continues to cut thousands of jobs while it streamlines its aircraft manufacturing operations.
The slowdown in the U.S. manufacturing industry, largely because of slumping production in the transportation sector, is a concern for American manufacturing workers and others who benefit from the industry.
“Monthly Advance Report On Manufacturers’ Shipments, Inventories And Orders July 2017,” U.S. Census Bureau, August 25, 2017.