Weak auto, aircraft sales hold down US durable goods in May

The US auto sector, which is vulnerable to the increasing trade confrontation, saw sales drop by the most since January 2015, dragging down overall sales of big-ticket manufactured goods in May

Washington (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 border tariffs 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.

The defense sector and communications were bright spots, however, with military aircraft and other hardware helping offset losses in metals, electrical equipment and computers, according to.

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 economists had expected this measure would rise 0.4 percent.

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.