Durable Goods Cool; Housing Soars

June 24, 2004
New orders for manufactured durable goods in May decreased 1.6% to $189.1 billion, according to a report released by the U.S. Department of Commerce today. This follows a revised 2.6% decrease in April and a 5.9% jump in March. Transportation equipment posted the largest decline, shedding 4.1% to $52.4 billion. Computer and electronic products were also down 1.8% to $31.9 billion, slowed by waning

New orders for manufactured durable goods in May decreased 1.6% to $189.1 billion, according to a report released by the U.S. Department of Commerce today. This follows a revised 2.6% decrease in April and a 5.9% jump in March.

Transportation equipment posted the largest decline, shedding 4.1% to $52.4 billion. Computer and electronic products were also down 1.8% to $31.9 billion, slowed by waning communications equipment orders.

Durable goods shipments, a factor that directly affects freight movement, decreased 0.7% to $194.2 billion. This follows a revised 0.8% drop in April and a 4.4% spike in March. This figure is related to freight value, as opposed to tonnage.

Computer and electronic products shipments posted the steepest decline, down 1.7% to $38.1 billion, dogged by fewer computer shipments. Machinery also decreased 2.3% to $23.4 billion.

Analyst Chris Brady, president of Commercial Motor Vehicle Consulting, told Fleet Owner that despite fewer new orders coming in, manufacturer backlogs continue to mount, implying that pressure to boost production is increasing. This is evident as unfilled orders continued an upward trend in May, with a 0.4% increase, as well as a 0.7% April increase and a 1.4% jump in March.

“Orders coming in right now are still above what production levels are,” Brady said. “There is still pressure on durable goods manufacturers to raise output, which implies higher freight volumes.”

Additionally, when put in context of the 5.9% spike in March new orders, the subsequent decreases still amount to an overall increase. “It’s trending upward— the growth may be dipping but I don’t think there’s any cause for concern, especially when you’re coming off of a high number. March [figures] was an unsustainable rate.”

Separately, the Department of Commerce released its May figures for new one-family houses. The figures showed a 14.8% surge in sales to 1,369 units. This follows a revised 7.9% decline in April sales, and a 11.1% March increase. Home sales figures are volatile as weather plays a role, but May figures indicate a 26.1% upward trend from six months earlier.

“It’s [the housing industry] booming. Interest rates are at historically low levels,” Brady said. “I expect housing to remain strong. With rates going up, consumers will be rushing to take advantage of the low interest rates. If people are sitting on the fence, this is a stimulus to get up and do it.”

Sales in the Northeast soared 53.2% to 121 units, although the region remains with the lowest sales turnout. In the South, sales jumped 20.3% to 663 units, further entrenching the region’s sales dominance. Sales in the West increased 6.5% to 379 units, while Midwest sales stagnated at 206 units.

About the Author

Terrence Nguyen

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