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Factory Orders Miss Expectations, Flat in August Following 1.0 Percent Decline

The string of economists overestimating the strength of the economy continues with factory orders.
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Manufacturers' new orders 2022-08

Please consider the Monthly Full Report on Manufacturers Shipments, Inventories, and Orders

New Orders 

New orders for manufactured durable goods in August, down two consecutive months, decreased $0.5 billion or 0.2 percent to $272.7 billion, unchanged from the previously published decrease. This followed a 0.1 percent July decrease. Transportation equipment, also down two consecutive months, drove the decrease, $1.0 billion or 1.1 percent to $92.0 billion. New orders for manufactured nondurable goods increased $0.5 billion or 0.2 percent to $275.7 billion.  

Shipments 

Shipments of manufactured durable goods in August, up fifteen of the last sixteen months, increased $2.2 billion or 0.8 percent to $272.2 billion, up from the previously published 0.7 percent increase. This followed a 0.2 percent July increase. Transportation equipment, up ten of the last eleven months, led the increase, $1.7 billion or 2.0 percent to $88.1 billion. Shipments of manufactured nondurable goods, up seventeen of the last eighteen months, increased $0.5 billion or 0.2 percent to $275.7 billion. This followed a 1.9 percent July decrease. Chemical products, up three of the last four months, drove the increase, $0.6 billion or 0.9 percent to $66.8 billion.  

Unfilled Orders 

Unfilled orders for manufactured durable goods in August, up twenty-four consecutive months, increased $5.3 billion or 0.5 percent to $1,132.1 billion, unchanged from the previously published increase. This followed a 0.7 percent July increase. Transportation equipment, up eighteen of the last nineteen months, led the increase, $3.9 billion or 0.6 percent to $659.0 billion.  

Inventories 

Inventories of manufactured durable goods in August, up nineteen consecutive months, increased $1.1 billion or 0.2 percent to $487.5 billion, unchanged from the previously published increase. This followed a 0.2 percent July increase. Machinery, up twenty-two consecutive months, led the increase, $0.5 billion or 0.6 percent to $84.4 billion. Inventories of manufactured nondurable goods, down two consecutive months, decreased $2.3 billion or 0.7 percent to $312.7 billion. This followed a 0.4 percent July decrease. Petroleum and coal products, down three consecutive months, drove the decrease, $3.2 billion or 6.1 percent to $49.5 billion. By stage of fabrication, August materials and supplies were virtually unchanged in durable goods and increased 0.1 percent in nondurable goods. Work in process increased 0.2 percent in durable goods and decreased 2.9 percent in nondurable goods. Finished goods increased 0.6 percent in durable goods and decreased 0.6 percent in nondurable goods.  

Bloomberg Econoday Consensus 

Factory orders are seen gaining 0.2 percent in August that would follow a 1.0 percent decline in July. Durable goods orders, which have already been released and are one of two major components of this report, fell 0.2 percent in the month.

The Bloomberg Econoday consensus was not off by much, but except for new home sales, economists' expectations continue to be on the high side. 

Few want to believe we are in or close to recession.

Lagging Data Still Rolling In

Today is October 4. Thus, the third quarter is over. 

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Yet, we are still discussing August data. There is nearly a full month of data for the quarter still coming.

Impact On GDPNow

Uncertain. The last two months are weak, but the advance report gave us (and the GDPNow model) a clue the report would be weak.

But it's not the weak report that matters but rather what the model expected. If the model expected weaker than the report, the GDPNow model will rise (in isolation) on this item. 

Shipments seem reasonably strong and its shipments that will matter the most to current GDP. 

Other than this report, which can easily go either way to the model, the rest of the data since the last GDPNow forecast was so abysmal, I suspect a huge negative change in the next report which is tomorrow.

Related Data for Next GDPNow Forecast

The September ISM report was much weaker than expected, with employment, new orders, and new export orders all in contraction.

Construction spending came in below the Bloomberg Econoday estimate for the 7th consecutive month. This one was a huge miss.

This post originated at MishTalk.Com

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