Economy
Core Capital Goods Orders Indicate Weak Investment
Written by Sandy Williams
September 28, 2019
Orders for durable goods rose 0.2 percent to $250.7 billion in August, but most of the increase was military related. Orders for defense-related goods jumped 15 percent. Orders minus defense decreased 0.6 percent, reported the U.S. Census Bureau.
Core capital goods, non-defense orders minus aircraft and an indicator of future investment, fell 0.2 percent. Economists blamed the 15-month trade war with China for dampening investment due to trade uncertainty.
“Trade protectionism continues to gum up U.S. manufacturing largely by undermining business investment,” said BMO senior economist Sal Guatieri.
The August advance report on manufacturers’ shipments, inventories and orders follows:
New Orders
New orders for manufactured durable goods in August increased $0.5 billion or 0.2 percent to $250.7 billion. This increase, up three consecutive months, followed a 2.0 percent July increase. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders decreased 0.6 percent. Fabricated metal products, up four of the last five months, led the increase by $0.4 billion or 1.3 percent to $34.4 billion.
Shipments
Shipments of manufactured durable goods in August, up three of the last four months, increased $0.3 billion or 0.1 percent to $254.2 billion. This followed a 1.2 percent July decrease. Machinery, up four of the last five months, drove the increase by $0.5 billion or 1.6 percent to $33.4 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in August, up two consecutive months, increased $0.7 billion or 0.1 percent to $1,162.3 billion. This followed a 0.1 percent July increase. Fabricated metal products, up three consecutive months, led the increase by $0.6 billion or 0.7 percent to $87.2 billion.
Inventories
Inventories of manufactured durable goods in August, up 13 of the last 14 months, increased $1.3 billion or 0.3 percent to $428.6 billion. This followed a 0.4 percent July increase. Transportation equipment, also up 13 of the last 14 months, drove the increase by $1.7 billion or 1.2 percent to $143.2 billion.
Capital Goods
Nondefense new orders for capital goods in August decreased $1.6 billion or 2.1 percent to $74.4 billion. Shipments increased $0.2 billion or 0.2 percent to $74.7 billion. Unfilled orders decreased $0.4 billion or 0.1 percent to $693.3 billion. Inventories increased $1.8 billion or 0.9 percent to $192.7 billion. Defense new orders for capital goods in August increased $1.8 billion or 15.4 percent to $13.7 billion. Shipments increased $0.1 billion or 0.5 percent to $12.7 billion. Unfilled orders increased $1.0 billion or 0.7 percent to $157.0 billion. Inventories decreased $0.3 billion or 1.2 percent to $23.7 billion.
Revised July Data
Revised seasonally adjusted July figures for all manufacturing industries were: new orders, $500.3 billion (unchanged); shipments, $504.0 billion (unchanged); unfilled orders, $1,161.6 billion (revised from $1,161.5 billion); and total inventories, $696.7 billion (revised from $696.5 billion).
Sandy Williams
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