July Shipments of Durable Goods Set New Record

The Census Bureau reported today that both: a) new orders and b) actual shipments of manufactured durable goods showed strong monthly gains in July, increasing by 4.2% and 2.6% respectively compared to June.  New orders were boosted by strong demand for civilian aircraft in July, including an order for 260 airplanes from Boeing. On a year-to-date basis, durable goods orders are up 8.9% and shipments are up 7.5% from a year ago. 

New orders for durable manufactured goods in July, at $230.73 billion, were at the highest monthly level since February 2008, more than four years ago (blue line in chart).  Actual shipments of manufactured durable goods (electrical equipment, computers, appliances, cars, aircraft, machinery, fabricated metal products, transportation equipment) have increased in seven of the last eight months and reached a new record high of $231 billion in July (red line in chart).   

In news reports, some concern was expressed by the 3.4% decline in July orders for "non-defense capital goods orders excluding aircraft," following a 2.7% decline in June, because those orders are considered to be a measure of planned business spending.  However on a year-to-date basis through July, those orders are 3.6% above the same period last year.  Further, those orders of about $61.6 billion in July represent only about one-quarter (27%) of the total durable goods orders in July of $231 billion.    

Bottom Line: Today's report on the strong monthly and annual increases in both new orders and actual shipments of durable factory goods strengthens the case that American manufacturing continues to be one of the strongest sectors and main drivers of the economic recovery.  In addition to strong gains in manufacturing output reflected in today's Census report, the 524,000 jobs added to factory payrolls since 2010 represent more than 13% of the total increase in payroll jobs during that period, even though manufacturing jobs represent fewer than 9% of the total payroll jobs in the economy.  For both gains in output and gains in employment over the last few years, the manufacturing sector is leading the rest of the U.S. economy.  

Related: See Business Insider's chart below and article "America's Manufacturing Industry Is The Envy Of The World Right Now."