Original Press Release
NAM Chief Economist Says Durable Goods Report Confirms Economy Stuck In "Low Gear"
Press release date: June 25, 2008
Rising Gasoline Prices Stymie Demand For Automotive Products
WASHINGTON, D.C., June 25, 2008 - Today's report from the U.S. Department of Commerce that orders for durable goods held steady in May is a warning sign that the domestic economy remains stuck in low gear if not stalled, said David Huether, chief economist of the National Association of Manufacturers.
Following declines in March and April, Commerce said new orders for durable manufactured goods remained unchanged in May. "The only reason orders did not fall for a third consecutive month in May was the 10.2 percent rise in non-defense aircraft orders," Huether said. "And since exports make up a significant portion of aircraft production, the improvement in new orders last month reflects continued gains in exports more than an improvement in domestic conditions. Also, recent news reports suggest the surge in orders for non-defense aircraft may have peaked because of rising energy prices that are driving up the cost of air travel and prompting many airlines to reduce service.
"Rising gasoline prices also continue to stymie demand for automotive products," Huether said. "New orders for motor vehicles and parts fell for a sixth consecutive month in May, and are down 16.6 percent since last November. This is the worst performance since the government began reporting this data in 1992.
"The picture is not all doom and gloom," Huether said. "Over the past few months, there have been some positive signs in manufacturing. Machinery, along with fabricated and primary metals, has experienced notable upswings in demand. While export demand is likely a major force behind the growth in machinery, the rise in domestic orders for metals is, in part, due to the rising global shipping costs stemming from higher energy costs."
The National Association of Manufacturers is the nation's largest industrial trade association, representing small and large manufacturers in every industrial sector and in all 50 states. Headquartered in Washington, D.C., the NAM has 11 additional offices across the country. Visit the NAM's award-winning web site at www.nam.org for more information about manufacturing and the economy.
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