Durable Goods Orders Surge on Military Aircraft Spending

(RepublicanInformer.com)- According to data released on Wednesday by the Commerce Department, a rise in orders for military aircraft caused an unexpected increase in new orders for durable products placed with American firms in June.

After increasing 0.8 percent the previous month, orders for durable goods increased by 1.9 percent in June. As surveys of purchasing managers and regional Federal Reserve banks revealed declining demand for American-made goods, economists had predicted a fall of 0.4%.

A sharp increase in the acquisition of defense aircraft drove the growth. After increasing by 9.8 percent in May and 2.4 percent in April, orders increased by 80.6 percent to $9.76 billion in June. This year, defense aircraft purchases have increased by 12 percent to $32.9 billion.

Except for the month immediately following the 9/11 attacks, the monthly amount is the second-highest level of defense orders ever.

The numbers don’t account for inflation. The Producer Price Index for goods increased by 2.4 percent in June, bringing its year-over-year increase to 17.4 percent. Prices for goods were up 0.5 percent in June and 9.1 percent year over year when food and energy were excluded. The index of expenses paid to American makers of defense products increased 0.7 percent, bringing its annual increase to 15.2 percent.

Orders increased by 0.4 percent when defense was excluded, and year-to-date totals are 11.4 percent higher than in 2017. Although that is more than what experts anticipated, after accounting for inflation, it probably shows a decline in orders. Prices for durable consumer items increased by 0.5% in June and are now 8.4% higher than they were a year ago.

Core capital goods orders, which do not include expenditure on airplanes or the military, increased by 0.5 percent in the month and are up 10.1 percent this year. These have been moderately rising for four months in a row and are used as a proxy for corporate investment. However, the cost of capital goods for the private sector increased by 0.7 percent in June and 9.3 percent overall, implying that some or all of the increase resulted from inflation.

Are the new orders a replacement for all the stuff we left to the Taliban in Afghanistan?