Demand for Durables Drifts Lower


Supply bottlenecks and chip shortages held up vehicles and parts, electrical equipment and appliances, driving the biggest losses. As consumers begin to shift back to services from goods, we could see some of the back orders canceled if suppliers cannot get the products out more quickly.

Nondefense aircraft orders surged 17.4% in April but lag pre-pandemic levels. Domestic air travel is expected to rebound this summer as resorts and hotels expand the number of rooms available. We do not expect to see business travel recover until 2022, and not to its pre-pandemic level. A slower pace of vaccinations abroad is likely to hamper international travel this year and next.

Defense orders fell 25.8% last month, the largest drop since January of 2020. Fewer military aircraft orders contributed to that decline.

Core capital goods orders, which strip out aircraft and defense orders and reflect investment plans, climbed 2.3% in April, the strongest pace in eight months, following an upward revision to March. Orders for computers, metals and machinery helped even as vehicle and appliances orders weakened. A housing market boom has contributed to shortages and price spikes for everything from appliances to raw materials like lumber.

Core shipments rose 0.9% in April. Upward revisions to March data suggest that business investment (which contributes to the overall GDP calculation) was more robust in the first quarter, with the second quarter off to a good start.




Bottom Line


Unfilled orders for all goods rose for a second consecutive month. Inventories for in-demand products remained tight. Overall, we expect to see durable goods orders rebound later during this quarter as bottlenecks dissipate and backlogs decline.






Media Contact:


Other Inquiries:




Copyright © 2021 Diane Swonk – All rights reserved.  The information provided herein is believed to be obtained from sources deemed to be accurate, timely and reliable. However, no assurance is given in that respect. The reader should not rely on this information in making economic, financial, investment or any other decisions. This communication does not constitute an offer or solicitation, or solicitation of any offer to buy or sell any security, investment or other product. Likewise, this communication serves to provide certain opinions on current market conditions, economic policy or trends and is not a recommendation to engage in, or refrain from engaging, in a particular course of action.


Economic Bearings

Measuring current economic conditions to help plot and adjust course