According to the Commerce Department, durable goods orders fell 2.5% in June, the biggest drop since a 7.8% fall in January. The decline was much larger than anticipated. Economists had predicted only a 0.6% drop. The biggest contributing factor was a falloff in orders from the transportation sectors. Orders for commercial aircraft were down 38.5% from June 2008, while orders for motor vehicles and parts were off 1%.

But analysts say the picture may be brighter than the overall numbers indicate. To begin with, the June drop in auto-related orders was substantially smaller than the 8.7% drop recorded for May, suggesting that dealers may be close to working through the inventory backlog that had accumulated over the past 12 to 18 months. In addition, if the transportation sector is taken out of the picture, orders for durable goods were actually up by 1.1% percent in June. Demand for steel and other primary metals rose by 8.9%, while orders for industrial machinery were up 4.4 percent. The latter figure is especially encouraging as it points to the possibility that US manufacturers are gearing up for new production.

As for trucking, the American Trucking Associations' advance seasonally adjusted For-Hire Truck Tonnage Index slipped 2.4 points in June after growing 3.2% in May. The index fell to 99.8. According to ATA chief economist Bob Costello, large retailer and manufacturer inventories have reduced the need for freight transport. "Today, many new product orders can be fulfilled with current inventories, not new production, thus suppressing truck tonnage," he explains. "This is likely to be the first time in memory that truck tonnage doesn't lead the macro economy out of a recession."