Durable goods orders in US likely to have remained weak in June

Durable goods orders in the US are expected to have remained weak in June. For almost two years, investment in durable goods has been subdued. Orders, excluding the volatile defence and aircraft categories, are around 3.4 percent lower than their July 2014 peak. In May, orders for non-defense capital goods, excluding aircraft, fell 3.6 percent year-on-year. Moreover, the annual rate has been negative for around 18 months. This category’s shipments had also dropped in May by 4.6 percent.

The weakness is expected to have carried forward to June. But the pace of fall is likely to have reduced slightly, noted Societe Generale in a research report. In June, Boeing recorded a drop of 86 percent in the orders’ value, following a sharp rise of 132 percent in May. The surge reported in May was not seen in the headline report, which presents a risk on the upside to the forecast, as aircraft orders rose just 0.9 percent.

However, with the severe decline registered by Boeing in June, aircraft orders are likely to have dropped modestly. Excluding this category, orders are expected to have remained flat, highlighting the weakness in the second quarter investment, according to Societe Generale.