Durable goods (trains, planes, automobiles, TV's, refrigerators, computers) are defined to be items that have a usable life of at least three years. The time to produce durable items is typically longer than for nondurables. So, economists look to durable goods statistics for indications of economic activity in the months to come.

New orders for manufactured durable goods in May increased $5.5 billion or 3.3 percent to $171.8 billion. As is often the case, the orders number was largely influenced by orders for aircraft and parts. When orders for the highly-variable transportation equipment sector are excluded, the May orders number grew by just $0.9 billion, or 0.7 percent. This represented the fifth increase in the past six months.

Another way to get a handle on the trend of orders data is by looking at it over a longer period than just a month. When we do that, the large monthly positive or negative contributions from the transportation sector tend to average out. If we look at the orders data for the year to date we find that for this period new orders were 4.4 percent greater than the same period last year. Taking a still-longer view on the data we find that, on a year-over-year basis, new orders for durable goods grew by 7.6 percent. The year-over-year change in orders has been growing steadily since February when it hit low of 1.03 percent.

Shipments of durable goods in May increased $3.2 billion or 1.9 percent to $170.5 billion -- the third increase in the last four months. Shipments since the first of the year were 3.3 percent higher than the same period last year. Year-over-year shipments rose by 7.1 percent

Unfilled orders for durable goods in May increased $1.4 billion or 0.3 percent to $457.6 billion. This was the eighth increase in the last nine months. Year-over-year unfilled orders grew by 4.9 percent.

So, almost any way you look at it, manufacturers of durable goods have been experiencing a upsurge in demand over the past several months. Shipments of goods have picked up over the past four months, along with increases in new orders over the past six months, and business has been so brisk that manufacturers' unfilled orders have risen in eight out of the last nine months.

In recent days we've seen some signs of a possible slowdown. Weekly unemployment claims have been on the rise and the housing sector is showing evidence of lessened activity due to higher interest rates. Will the durable goods sector slow down as well? It hasn't happened yet.

Byline: Lafferty (MF Merlin)