The Economy

May Durable Goods Report Shows Manufacturing Is Stabilizing

"Core" capital goods orders, a key gauge of business spending plans, rose last month.
Katie Kuehner-HebertJune 23, 2015

Manufacturing is stabilizing, although the lingering effects of lower oil prices and the strong dollar will continue to put a slight damper on activity, according to a new report.

New orders for manufactured durable goods in May fell 1.8%, to $228.9 billion, following a 1.5% drop in April, the Commerce Department said Tuesday. But excluding transportation, new orders rose 0.5%.

Additionally, “core” capital goods orders — non-defense capital goods orders excluding aircraft, a key gauge of business spending plans — rose 0.4% in May, after slipping 0.3% in April.

CFO Insights on Inflation, Workforce Challenges, and Future Plans 

CFO Insights on Inflation, Workforce Challenges, and Future Plans 

Download our 2022 survey report for a high-level view of finance team projections and strategies, directly from our CFO.com executive readers.

“Manufacturing, which accounts for about 12% of the U.S. economy, has been hurt by investment spending cuts in the energy sector in the aftermath of a more than 60% plunge in crude oil prices last year, as well as dollar strength,” Reuters wrote. “The dollar has gained about 12% against the currencies of the United States’ main trading partners since June 2014, taking a bite out of the profits of multinational corporations.”

Manufacturers have also been constrained by businesses with huge inventories placing fewer orders.

Transportation equipment, also down three of the last four months, drove the decrease of overall durable goods orders, the Commerce Department said. Orders for transportation equipment fell 6.4%, to $71.7 billion in May.

Shipments of manufactured durable goods, down four of the last five months, fell 0.1% in May, to $239.9 billion. That followed a 0.2% drop in April. Shipments of transportation equipment, also down four of the last five months, drove the decrease, falling 0.9%, to $76.7 billion in May.

4 Powerful Communication Strategies for Your Next Board Meeting