Durable goods orders recovered by 11.2% from June to July, according to Commerce Department numbers released on Wednesday. Durable goods are defined as long lasting factory made items, designed to last at least three years. Amidst all the coronavirus turmoil, this is one area that does seem to be having a sharp recovery.
Orders for nondefense capital goods, better known as core orders, picked up by 1.9% from June to July. This is a slower increase than we saw from May to June, but it is also getting close to February’s levels. Core orders are considered a measure of business investment.
Let’s dig into the details. New orders for motor vehicles jumped 21.9% monthly, thanks to pent up demand and low interest rates. Motor vehicle orders actually surpassed purchases from July 2019 last month.
Orders for electrical equipment including appliances grew 4% month over month. Fabricated metal parts, machinery, and computers and electronics each gained 2% from June to July.
The overall transportation category is where things start to get strange. Between autos and military aircraft, orders for transportation equipment were up by 35.6% from one month ago. After taking out transportation equipment, durable goods orders only rose 2.4%. It’s not a secret that the transportation industry, and aircraft in particular, have been on a rollercoaster ride throughout Covid.
Factories in the United States have struggled to regroup after coronavirus lockdowns decimated supply chains and created a need for new safety protocols. Autos and manufacturing seem to have weathered the storm, though, generally recovering more quickly than their service sector counterparts.