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The Census Bureau's Advance Monthly Report on Manufacturers' Shipments, Inventories and Orders shows unexpected weakness.

New Orders

New orders for manufactured durable goods in September decreased $2.8 billion or 1.1 percent to $248.2 billion, the U.S. Census Bureau announced today. This decrease, down following three consecutive monthly increases, followed a 0.3 percent August increase. Excluding transportation, new orders decreased 0.3 percent. Excluding defense, new orders decreased 1.2 percent. Transportation equipment, also down following three consecutive monthly increases, led the decrease, $2.3 billion or 2.7 percent to $84.5 billion.


Shipments of manufactured durable goods in September, down three consecutive months, decreased $1.0 billion or 0.4 percent to $252.5 billion. This followed a 0.1 percent August decrease. Transportation equipment, also down three consecutive months, drove the decrease, $1.0 billion or 1.2 percent to $84.6 billion.


Inventories of manufactured durable goods in September, up fourteen of the last fifteen months, increased $2.1 billion or 0.5 percent to $430.3 billion. This followed a 0.2 percent August increase. Transportation equipment, also up fourteen of the last fifteen months, led the increase, $2.1 billion or 1.4 percent to $145.3 billion.

Capital Goods

Nondefense new orders for capital goods in September decreased $2.1 billion or 2.8 percent to $71.6 billion. Shipments decreased $0.1 billion or 0.1 percent to $74.2 billion. Unfilled orders decreased $2.6 billion or 0.4 percent to $690.4 billion. Inventories increased $1.8 billion or 0.9 percent to $194.5 billion. Defense new orders for capital goods in September decreased $0.6 billion or 4.5 percent to $13.2 billion.

Econoday Comments

  • An emphatically weak set of durable goods headlines for September raises the alarm for the health of the manufacturing sector while unexpectedly substantial contraction in capital goods orders deepens specific questions on the outlook for business investment. Durable goods orders fell a monthly 1.1 percent in September, on its face significantly weak but roughly near expectations in contrast to ex-transportation orders which fell 0.3 percent to just make the bottom end of Econoday's consensus range. Well below the bottom of expectations is a 0.5 percent drop in core capital goods orders (nondefense ex-aircraft), one intensified by a downward revision to August which now shows a 0.6 percent monthly decline that followed no better than no change in July.
  • Turning back to the headline, an 11.8 percent decline in commercial aircraft is a key negative for September but no surprise for a component, reflecting the Boeing 737 Max grounding, that has been struggling badly this year. Reflecting the GM auto strike is 1.6 percent decline in motor vehicle orders and a 1.5 percent decline in related shipments.
  • Breaking down capital goods orders, weakness appears to be concentrated in fabrications, down 1.5 percent in the month, and computers which fell 0.9 percent. Machinery actually rose 0.2 percent in the month but benefited from an easy comparison following 0.3 percent and 1.0 percent declines in the prior two months. Communications equipment, like machinery, also rose in September but following steep declines in prior months.
  • Shipments for core capital goods fell 0.7 percent in September following no change in August and another 0.7 percent decline in July. These three results will be part of the third-quarter GDP mix for nonresidential investment, a component that may well be on a descent and one the Federal Reserve may well tie to weakening global demand for high-end US goods. Today's results increase the force of those on the FOMC who are pushing for continued rate cuts, including perhaps at next week's meeting.
  • Other readings of note include another weak showing for total unfilled orders, at no change, and a 0.4 percent dip for total shipments that follows declines in both August and July. Likely reflecting weakness in shipments is a sharp and perhaps unwanted build in total inventories of 0.5 percent in September.

One Tweet Recap

Just a "Few" Minor Things

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  1. Boeing
  2. GM
  3. Ford
  4. Caterpillar
  5. China
  6. EU

Hmm. Is that a few?

Industrial Production

Last week the Fed reported on Industrial Production was down 0.4 percent in September. I wondered how much of that was GM related. Certainly some of it, but how much? Since then, Ford and Caterpillar have reported. So let's go down the list.

  1. Boeing: This isn't new news, but it is reflective of Boeing's 737 MAX problems. The WSJ reports Airbus is Set to Overtake Boeing to become the world’s largest plane maker by deliveries.
  2. GM: On Day 38 of the strike, the WSJ reports UAW Workers Are Tilting in Favor of New Contract With GM 46,000 GM workers who have gone without a company paycheck for six weeks. GM promised sweeteners such as plant investments and escalated pay. But what if sales flounder?
  3. Ford: There was no strike at Ford. But yesterday, the Detroit Free Press reported Ford Earnings Dip 57%. The company blamed warranty costs, China, and incentives. CNBC reported Ford’s Shares Slide on Lower Year-End Guidance, Weak Demand in China.
  4. Caterpillar: CNBC reports Caterpillar Earnings Badly Miss the Street, Cuts Forecast Again
  5. China: Trump's trade war with china is taking a toll. Every company above is impacted in some way. So is Apple and many other manufactures.
  6. EU: Trump is also feuding with the EU and threatens tariffs on German cars. Meanwhile, the EU and UK still have not sorted out Brexit.

Not One Thing

The slowdown is not just one thing. ​There's plenty of blame to spread around.

​GM and Ford are both rated Junk by one rating agency. A further slip will force investment grade bond funds to sell.

Trump desperately needs a trade deal with China, but keeps asking for things China won't accept.

With elections pending, China can be patient, Trump can't, but he has dickered around so long now, whatever he does may just be too little too late.

I am not trying to pin this all on Trump, but he certainly didn't help.

Meanwhile, Trump kept bragging about nonexistent results such as "massive tarrifs collected" the whole time.

Mike "Mish" Shedlock