June Durable Goods Orders Decline

Date: July 27, 2016

Orders Fall 4% In Largest Monthly Decline In Nearly Two Years

The latest Commerce Department data shows that June durable goods orders fell by $9.3 billion, or 4%, to $219.8 billion. This follows a 2.8% decline in durable goods orders in May. For June, new orders excluding transportation fell by 0.5%. Transportation equipment led declines in new orders with a 10.5% decrease. Bloomberg News notes that in one bright spot for the survey results, orders “for non-military capital goods excluding aircraft climbed 0.2%” in June, the first rise “in three months.” However, Bloomberg cautions that such a small gain indicates that “companies are in no rush to significantly ramp up investment.” Overall durable goods orders “slumped a larger-than-forecast 4 percent, the most since August 2014. While demand for business investment stabilized, bigger gains will be needed to jump-start an economy that’s been dependent on consumers.” The “economists surveyed by Bloomberg estimated orders for all durable goods would fall 1.4 percent,” while business bookings “matched the median estimate.”

What This Means For Small Businesses

Small businesses are continuing to see the effects of uneven economic growth following the recession. The latest Commerce Department data is a further indication of this uneven growth, as it signals that demand for durable goods is waning. As NFIB Chief Economist Bill Dunkelberg wrote in the latest Small Business Economic Trends report, “Uncertainty is high, expectations for better business conditions are low, and future business investments look weak. Our data indicate that there will be no surge from the small business sector anytime soon and prospects for economic growth are cloudy at best.” In this kind of uncertain economic environment, Dunkelberg warned, “Small businesses are in maintenance mode experiencing little growth.”

Additional Reading

Marketwatch also reported on the latest durable goods data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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