"Durable Goods" Data Shows Alarming Decrease For Second Consecutive Month
Overview:
Key economic logistics forecasting drops 17% in April
Shipments of core GDP related products decrease for the third month in four, fueling recession fears
Thursday, May 28 The Commerce Department released the Monthly Durable Goods Report which makes for bleak reading. An ominous sign of future economic activity particularly as it relates to the shipping industry.
The manufacture and shipment of Durable Goods (expensive items that last three or more years), and one of their subset categories, Core Capital Goods (tangible goods or services) are used by economists as leading indicators of future economic activity because as Investopia notes, “Businesses and consumers generally place orders for durable goods when they are confident the economy is improving. An increase in durable goods orders signifies an economy trending upwards.”
The full report, which can be found here notes, “New orders for manufactured durable goods in April decreased $35.4 billion or 17.2 percent to $170.0 billion… [which] followed a 16.6 percent March decrease.” The report confirms that, “Transportation equipment, down three of the last four months, led the decrease, $23.9 billion or 47.3 percent to $26.6 billion.”
Like with Orders, the Shipments of Manufactured Durable Goods decreased in April for the third time in the last 4 months by, “$41.5 or 17.7 percent to $192.3 billion. This followed a 5.5 percent March decrease.”
Additional GDP reporting from the Commerce Department released May 28 revised first-quarter GDP figures to a 5 percent decrease instead of the previously estimated 4.8 percent contraction. These datasets as Lucia Mutikani of Reuters explains, “ leaves economists expecting gross domestic product could drop in the second quarter at as much as 40%, the worst since the Great Depression.”
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