Economy

Durable Goods Orders Drop 1.1 Percent in September

October 24, 2019

Durable goods orders fell by the greatest amount since May, dropping 1.1 percent in September, significantly more than analysts’ estimates of a 0.8 percent decline. Core capital goods, non-defense minus aircraft and a proxy for business investment, fell 0.5 percent.

The latest Census Bureau report indicates further weakness in the manufacturing sector. Continued uncertainty regarding trade and the domestic and global economy has stifled growth in the U.S. and abroad.

“With the survey-based manufacturing orders indices from the ISM and Markit at depressed levels and CEO confidence also slumping, there are plenty of reasons to believe that equipment investment will contract again in the fourth quarter,” wrote U.S. economist Paul Ashworth at Capital Economics as quoted by Market Watch.

The September advance report on manufacturers’ shipments, inventories and orders follows:

New Orders

New orders for manufactured durable goods in September decreased $2.8 billion or 1.1 percent to $248.2 billion. 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 by $2.3 billion or 2.7 percent to $84.5 billion.

Shipments

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 by $1.0 billion or 1.2 percent to $84.6 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in September, down following two consecutive monthly increases, decreased less than $0.1 billion or were virtually unchanged to $1,163.5 billion. This followed a 0.2 percent August increase. Fabricated metal products, down following three consecutive monthly increases, drove the decrease by $0.1 billion or 0.1 percent to $87.0 billion.

Inventories

Inventories of manufactured durable goods in September, up 14 of the last 15 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 14 of the last 15 months, led the increase by $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. Shipments increased $0.2 billion or 1.4 percent to $12.8 billion. Unfilled orders increased $0.4 billion or 0.2 percent to $157.5 billion. Inventories increased $0.2 billion or 1.0 percent to $24.0 billion.

Revised August Data

Revised seasonally adjusted August figures for all manufacturing industries were: new orders, $500.0 billion (revised from $499.8 billion); shipments, $502.5 billion (revised from $503.0 billion); unfilled orders, $1,163.6 billion (revised from $1,162.9 billion); and total inventories, $695.8 billion (revised from $695.9 billion).