The American defense systems industry had a quiet month in May for new orders. Panjiva analysis of Department of Defense data shows there were approved orders of just $1.45 billion in May after an average $6.44 billion per month year-to-date in 2018. That may not be helped in coming months by the increasingly fractious trade relations with Europe and Canada caused by the implementation of duties on steel and aluminum as outlined in Panjiva research of June 1.

A further hindrance to order approvals may come from “security guarantees” provided to North Korea by President Trump as well as a commitment to withdraw from military exercises in the region as part of the recent summit with Chairman Kim Jong Un.

Chart segments export sales approvals by the U.S. Department of Defense by systems type. Calculations include DSCA data.  Source: Panjiva

The prior acceleration in approved orders yet to be seen in delivered exports. Panjiva data shows that shipments of weapons systems and military aerospace products fell 27.0% on a year earlier in April. The aerospace industry in particular had its worst month since January 2016 while the trailing 12 month total of $8.8 billion in exports was the lowest since September 2014.

Chart compares U.S. exports of arms / military vehicles and military aircraft on a monthly (dotted) and annual average (solid) basis.  Source: Panjiva

Meanwhile shipments to South Korea in particularly in the past 12 months have totalled just $208 million down from from $1.53 billion a year ago. That’s the result of the completion of aerospace deliveries and made the lowest annual total since 2009. With no significant orders since the February 2017 approval of $140 million worth of Sidewinder and Maverick missiles there’s unlikely to be a recovery in exports in the near-term.

Chart compares U.S. exports of arms / military vehicles and military aircraft to South Korea.  Source: Panjiva