Economy

A Surprise Increase in Durable Goods Orders
Written by Sandy Williams
December 2, 2019
Durable goods orders rose 0.6 percent in October, beating economists’ expectations of a 1 percent or more decline. Most of the increase was due to orders for military equipment including an 18 percent increase for military aircraft.
A bright spot for the metals industry in October was a 1.8 percent increase in fabricated metal product orders.
Trade tensions with China continue to weigh heavily on the manufacturing sector due to higher input costs and lower demand abroad. The manufacturing sector contributes nearly 12 percent to the U.S. GDP.
Core capital goods, non-defense minus aircraft which is a proxy for business investment, rose 1.2 percent after declining 1.4 percent in September.
“The core durable goods data for October indicate that business spending is likely to continue, although the pace may decline considerably,” wrote Zacks analyst Nalak Das. “Therefore, stabilization of business investment in October will act as a relief to the manufacturing sector. Additionally, new orders for core capital goods is a leading metric to calculate equipment spending in the U.S. government’s GDP measurement.”
Following is the U.S. Census Bureau October advance report on manufacturers’ shipments, inventories and orders:
New Orders
New orders for manufactured durable goods in October increased $1.5 billion or 0.6 percent to $248.7 billion. This increase, up four of the last five months, followed a 1.4 percent September decrease. Excluding transportation, new orders increased 0.6 percent. Excluding defense, new orders increased 0.1 percent. Fabricated metal products, up two of the last three months, led the increase by $0.6 billion or 1.8 percent to $34.1 billion.
Shipments
Shipments of manufactured durable goods in October, up following three consecutive monthly decreases, increased less than $0.1 billion or was virtually unchanged to $251.6 billion. This followed a 0.7 percent September decrease. Machinery, up two of the last three months, drove the increase by $0.3 billion or 1.0 percent to $33.1 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in October, up three of the last four months, increased $1.4 billion or 0.1 percent to $1,164.8 billion. This followed a virtually unchanged September decrease. Transportation equipment, up four consecutive months, led the increase by $0.9 billion or 0.1 percent to $795.5 billion.
Inventories
Inventories of manufactured durable goods in October, up 15 of the last 16 months, increased $1.4 billion or 0.3 percent to $432.0 billion. This followed a 0.5 percent September increase. Transportation equipment, also up 15 of the last 16 months, drove the increase by $1.8 billion or 1.3 percent to $147.4 billion.
Capital Goods
Nondefense new orders for capital goods in October increased $2.2 billion or 3.2 percent to $73.3 billion. Shipments increased $1.0 billion or 1.4 percent to $75.1 billion. Unfilled orders decreased $1.8 billion or 0.3 percent to $688.2 billion. Inventories increased $1.4 billion or 0.7 percent to $195.8 billion. Defense new orders for capital goods in October increased $2.3 billion or 16.6 percent to $16.2 billion. Shipments increased $0.2 billion or 1.2 percent to $13.0 billion. Unfilled orders increased $3.2 billion or 2.0 percent to $161.4 billion. Inventories increased $0.4 billion or 1.5 percent to $24.3 billion.
Revised September Data
Revised seasonally adjusted September figures for all manufacturing industries were: new orders, $496.3 billion (revised from $496.7 billion); shipments, $500.6 billion (revised from $501.1 billion); unfilled orders, $1,163.5 billion (revised from $1,163.3 billion) and total inventories, $698.1 billion (revised from $697.9 billion).

Sandy Williams
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