Why This Matters to Distributors: U.S. durable goods orders increased in July, with gains in machinery and primary metals providing a positive demand signal for industrial distributors. The increase extended beyond transportation, although business equipment spending remained uneven.
New orders for U.S.-manufactured durable goods rose 1.1% in July, with gains in transportation equipment, machinery and primary metals pointing to continued demand across parts of the industrial economy.
Orders increased $3.6 billion to $339.3 billion, according to advance data released Wednesday by the U.S. Census Bureau. July marked the fourth increase in the past five months and followed a 0.5% gain in June.
Transportation equipment accounted for much of the increase, rising 2.3%, or $2.6 billion, to $116.2 billion after two consecutive monthly declines.
But the July gains extended beyond transportation. Orders excluding transportation increased 0.4%, while orders excluding defense rose 1.3%.
Several categories closely tied to industrial distribution also posted gains. Primary metals orders increased 1.5%, while machinery orders rose 1.2%. Overall capital goods orders increased 1.3%.
Demand weakened in some technology and electrical categories. Orders for computers and electronic products declined 1.1%, while electrical equipment, appliances and components fell 0.4%.
A closely watched measure of business equipment investment showed more modest growth. Orders for non-defense capital goods excluding aircraft increased 0.2% in July after rising a revised 1.7% in June.
The July results point to an industrial economy that continues to generate demand but remains uneven across product categories. For distributors serving manufacturers, the increases in machinery and primary metals are notable because they suggest customers continue placing orders for equipment and industrial products during the month.
The headline increase also came in above expectations. Economists surveyed by The Wall Street Journal had forecast a 0.5% increase in durable goods orders.
Durable goods are manufactured products expected to last at least three years and include machinery, industrial equipment, vehicles, computers, and electrical equipment. New orders are closely watched as an indicator of future manufacturing activity because they measure orders received by manufacturers, net of cancellations.
The Census Bureau’s July figures are preliminary. More complete data on manufacturers’ shipments, inventories and orders are scheduled for release in September.Do not miss any content from Distribution Strategy Group. Join our list.
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