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First Cut: New orders for durable goods decline about as expected in April due to weak aircraft orders

New orders for durable goods decreased 2.1% in April after up 1.7% in March and down 2.6% in February. The data reflects revisions issued on May 16. The lower dollar value of new orders was expected due to soft orders for new aircraft. The transportation component was down 5.9% in April on sharp declines in nondefense aircraft (-25.1%) and defense aircraft (-2.4%) as well as lower orders for motor vehicles (-3.4%). Excluding transportation, new orders were flat in April.

The calculation for “core” new orders — durables orders less civilian aircraft capital goods and defense capital goods — was down 1.2% in April, also on weakness in aircraft.

The underlying trend remains fairly steady but without much upward momentum. Orders are likely to remain soft into May, in part from another month in which aircraft orders are likely to lag. Given Boeing’s problems associated with damage control after the crashes of two 737 MAX aircraft, it may take a while for orders to improve, at least until the Paris Air Show in June.

Unfilled orders were down 0.1% in April, in part due to a decrease of 0.3% in nondefense aircraft and parts, although defense aircraft and parts rose 0.8%. Shipments fell 1.6% in April, down for a second month in a row and mainly due to weak transportation shipments which were down 4.1%. Inventories were up 0.4%, about on trend with recent months where businesses are ensuring they have enough on hand to meet demand without risking building up an excess.


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