US Factory Orders and Trucking Volumes Plunge

WASHINGTON, DC-June brought more troubling news for US warehouse and distribution center owners as big-ticket factory orders and trucking freight volumes both plummeted. US factory orders for durable goods fell by the largest amount in five months, while truck tonnage dropped 13.6%, the steepest year-over-year decrease since the recession began.

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.