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Weak auto, aircraft sales hold down US durable goods in May
WASHINGTON, June 28, 2018 (BSS/AFP) – A steep drop in US auto sales and a
second straight month of declining orders for civilian aircraft held down
sales in the US manufacturing sector in May, the Commerce Department reported
Wednesday.
The crucial auto sector, which is now vulnerable to retaliation by US
trading partners in President Donald Trump’s emerging trade war, had its
steepest monthly decline in more than three years.
And orders for US-manufactured primary metals also fell despite the
tariffs Trump imposed in May on steel and aluminum.
The May decline marked two months of falling sales and could weigh on GDP
growth in the second quarter.
Still, orders were nearly 10 percent higher than their level in May of
last year. And analysts said upward revisions to April’s figures made May
sales decline look worse than it otherwise might have.
Total orders for large, US-manufactured items fell 0.6 percent for the
month to $248.8 billion, slightly better than the one percent drop that
analysts were expecting.
Auto sales fell 4.2 percent, the largest decrease since January 2015.
Civilian aircraft sales fell seven percent, after the 30.3 percent decline in
April, but military aircraft jumped 21.1 percent.
Excluding the volatile transportation sector, sales also still fell 0.3
percent, also a disappointment as conomists had expected this measure would
rise 0.4 percent.
The defense sector and communications were bright spots, with military
aircraft and other hardware helping offset losses in metals, electrical
equipment and computers, according to the monthly report.
Orders for electrical appliances and components fell 1.5 percent, the
largest decline since November. Meanwhile, civilian capital goods orders,
which can track changes in the price of oil, fell 0.2 percent.
Ian Shepherdson of Pantheon Macroeconomics said downplayed the drop in car
sales, saying the auto sector had reverted to the trend seen before last
year’s late-summer hurricanes — which caused a large bump in sales of
replacement vehicles — and so was “nothing to worry about.”
Furthermore, the dip in capital goods followed a steep upward revision for
April, “so the robust upward trend remains intact” and should contribute to
second-quarter GDP growth, he said in a research note.
BSS/AFP/HR/1050