The Bloomberg Econoday consensus forecast was a 1.6 percent increase in factory orders. The actual increase was 2.8 percent. The Jump is fueled by a massive increase in aircraft orders.
When I first looked at the factory order numbers this morning, some of them looked shocking. Durable goods jumped 4.6 percent and transportation orders rose 12.7 percent.
The numbers were influenced by a whopping 92.5 percent jump in nondefense aircraft orders. It’s best to ignore aircraft and focus on the core items.
Aircraft have very long lead times and the percentage changes swing wildly. In July, nondefense aircraft orders fell 45.7 percent. It takes nearly a 100% gain to make up for that.
New Orders
- New orders for manufactured durable goods in September, up following two consecutive monthly decreases, increased $13.1 billion or 4.6 percent to $297.0 billion, down from the previously published 4.7 percent increase. This followed a 0.1 percent August decrease.
- Transportation equipment, also up following two consecutive monthly decreases, led the increase, $12.3 billion or 12.7 percent to $109.2 billion.
- New orders for manufactured nondurable goods increased $3.0 billion or 1.0 percent to $304.5 billion.
Shipments
- Shipments of manufactured durable goods in September, down two of the last three months, decreased $0.9 billion or 0.3 percent to $283.6 billion, unchanged from the previously published decrease.
- This followed a 0.5 percent August increase. Transportation equipment, down three of the last four months, drove the decrease, $1.1 billion or 1.2 percent to $91.3 billion.
- Shipments of manufactured nondurable goods, up four consecutive months, increased $3.0 billion or 1.0 percent to $304.5 billion. This followed a 2.2 percent August increase. Petroleum and coal products, also up four consecutive months, led the increase, $2.2 billion or 3.1 percent to $73.6 billion.
Reflections on Factory Orders
It’s shipments that drive GDP, but orders lead shipments.
The one percent drop in motor vehicles and parts has a pair of possible explanations: The UAW strike that’s now over and falling consumer demand for EVs despite the massive push and subsidies by the Biden administration.
ISM Manufacturing Plunges to 46.7 Percent. New Orders, Backlogs in Contraction
Yesterday, I commented ISM Manufacturing Plunges to 46.7 Percent. New Orders, Backlogs in Contraction
Economists expected the ISM® manufacturing PMI® to hold steady at 49.0. Instead, the PMI went into significant contraction with a steep drop in employment.
Arguably, the most telling statistic is that eighty-nine percent of panelists’ companies reported ‘same’ or ‘lower’ prices in October.
Overall weakness in prices can be attributed to falling demand, not strikes, And it’s despite artificial demand spurred by the Inflation Reduction Act.
Falling prices will be welcomed by the Fed.
Wake Up Mr. President, Consumers Don’t Want EVs
Despite subsidies, EVs are piling up on dealer lots. Prius hybrids have a 1-week supply. The Mustang Mach-E SUV has a 3 1/2 month supply.
For discussion, please see Wake Up Mr. President, Consumers Want Hybrids, Not EVs.
Soft vs Hard Data
ISM is soft data while the factory orders report is hard numbers.
Those hard numbers, with a spotlight on core items and shipments, is not as strong as some of the headline numbers appeared at first glance.
I would rather code for PLCs than weld overhead.
Lisa, you will code PLCs and the younger ones will build and tell you what to code so they can build better. You will be on production floor alongside them and there will not be a cubical in sight.
A good many PLCs are networked now and you can program them from the office.
It’s an improvement over balancing a laptop in one hand while hunting and pecking with the other while standing at an open electrical cabinet.
😉
First year: Acquire land and order tools. Second year: build plant and install ordered tools. Third year: start producing.
Classic industrial expansion road. Expansion of industrial production is starting. Drop coding and learn to weld.
“Drop coding and learn to weld.”
Robotic factory welders aside….if what you say is true, then we’re in some doo-doo without the labor force.
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Yesterday, Fed day. Tomorrow Nasrallah speech. WW III may start tomorrow.
WW III already started
I think you may be right And it seems to me factory orders are up so much due to artillery shell , cruise missile, ammo production War is great for the MIC profits but not so good for the victims
Military orders were down. You would know that if you had read the report but you didn’t read it. You are not here to discuss economics but here to discuss politics, or rather post negative comments on everything. That is how you make your living.
Make my living? Are you drunk or just that stupid I collect SS rental income and run a AirBnB resort on the Med No income from posting the truth here on Mishy that’s for sure
Military orders were down ? Yeah sure you are dumb enough to believe that ? Pretty sad