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First Cut: New orders for factory goods held back by transportation, petroleum prices

New orders for factory goods declined 0.7% in May from April while April was off 1.2% from March (previously down 0.8%). The decrease was much as expected and will not add to the immediate worries about economic growth.

On the durables side, a 4.6% decline in transportation reflected softness in nondefense and defense aircraft (down 28.2% and down 15.5%, respectively).  Excluding transportation, durables were up 0.4%. Recently Boeing has booked few-to-no new orders, but that will change in the June data after an agreement to buy a large number of 737 MAX aircraft was inked at the Paris Air Show.

Nondurables were down 0.2% overall, in part on a 2.4% drop in petroleum and coal products.

“Core” orders — durables less civilian aircraft and defense capital goods — were flat in May, an improvement from the down 1.5% in April.

Unfilled orders declined 0.5% in May, in part due to cancellations at Boeing of the 737 MAX aircraft that are ongoing. Shipments were up 0.1% in May, and inventories were up 0.2%. There are as yet no worries about inventory accumulation and goods appear to be shipping at a normal pace.

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