Durable Goods Order Jump 4.5%, Almost Entirely on Aircraft

The Census Department report on Advance Durable Goods shows orders rose 4.5% in August.

New Orders

New orders for manufactured durable goods in August increased $11.1 billion or 4.5 percent to $259.6 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 1.2 percent July decrease. Excluding transportation, new orders increased 0.1 percent. Excluding defense, new orders increased 2.6 percent. Transportation equipment, also up two of the last three months, led the increase, $10.9 billion or 13.0 percent to $95.3 billion.

Shipments

Shipments of manufactured durable goods in August, up three of the last four months, increased $1.9 billion or 0.8 percent to $253.1 billion. This followed a 0.1 percent July decrease. Transportation equipment, up two of the last three months, led the increase, $1.6 billion or 1.9 percent to $86.0 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in August, up nine of the last ten months, increased $10.4 billion or 0.9 percent to $1,176.5 billion. This followed a 0.1 percent July increase. Transportation equipment, up six of the last seven months, led the increase, $9.3 billion or 1.2 percent to $811.0 billion.

Inventories

Inventories of manufactured durable goods in August, down following nineteen consecutive monthly increases, decreased $1.4 billion or 0.4 percent to $407.0 billion. This followed a 1.2 percent July increase. Transportation equipment, down two of the last three months, drove the decrease, $1.8 billion or 1.4 percent to $129.3 billion.

Capital Goods

Nondefense new orders for capital goods in August increased $5.7 billion or 7.6 percent to $81.3 billion. Shipments increased $2.2 billion or 3.0 percent to $77.3 billion. Unfilled orders increased $3.9 billion or 0.5 percent to $718.6 billion. Inventories decreased $1.3 billion or 0.8 percent to $177.4 billion. Defense new orders for capital goods in August increased $4.9 billion or 44.4 percent to $16.0 billion. Shipments increased $0.1 billion or 1.2 percent to $11.6 billion. Unfilled orders increased $4.4 billion or 3.0 percent to $151.5 billion. Inventories decreased $0.2 billion or 0.8 percent to $22.6 billion.

Econoday provides a balanced take.

• A big swing higher for civilian aircraft skews August’s durable goods headline which jumped 4.5 percent to hit Econoday’s high estimate. But when excluding aircraft and other transportation equipment, durable goods orders inched only 0.1 percent higher which falls below Econoday’s low estimate. And far below the low estimate are core capital goods orders (nondefense ex-aircraft) which fell 0.5 percent.
• Orders for civilian aircraft surged 108 percent in the month but follow a 41 percent drop in July. Other categories of note include motor vehicles, down 1.0 percent, machinery up only 0.1 percent, computers & electronics down 0.5 percent, and fabricated metals which were unchanged. Gainers include primary metals at 0.9 percent and also communications equipment at 0.7 percent.
• The drop for core capital goods does follow strong gains in prior months, including 1.5 percent in July, and though the drop points to a slip for related shipments in future months, core capital goods shipments did rise 0.1 percent in August and a very strong 1.1 percent in July which will help the nonresidential fixed investment reading for third-quarter GDP.
• And a major plus overall is an unusual 0.9 percent jump in total unfilled orders, one boosted by both aircraft and also primary metals where tariffs and pre-buying may very well be a factor. Inventories were drawn down in August, 0.4 percent lower but follow a 1.2 percent build in July and, for third-quarter GDP, will be offset by strong builds for wholesale and retail inventories where advance data were also released this morning.
• This is a widely mixed report but underlying it is general strength for manufacturing, a sector that is still getting a boost from capital goods and which the economy is depending on for year-end strength.

Mike “Mish” Shedlock