Economy

Durable Goods Orders Higher than Expected

October 27, 2020

Orders for durable goods increased for the fifth straight month, up 1.9 percent to $237.1 billion and surpassing expectations. Transportation orders led the increase with a 4.1 percent gain. Automotive orders rose 1.5 percent in September on continued strong sales for SUV’s and light trucks.

The commercial airline industry, showing losses through the pandemic, had a slight reprieve in September with $1.8 billion in orders. In contrast, defense orders for aircrafts and parts declined 46.1 percent from September to October.

Core capital goods, a measure for future investment that excludes defense and transportation, rose 1.0 percent in September. A 4.0 percent jump in primary orders and 1.2 percent increase in fabricated metal parts indicate rising demand in the industrial sector and a stabilizing supply chain. Orders for consumer products such as electrical equipment, computers and appliances declined in September.

“Manufacturers have played a major role in the recovery in 2020, but they are unlikely to go unscathed by the latest coronavirus outbreak if it hurts the broader U.S. or global economies,” said MarketWatch.

“The recent improvement in business investment, for its part, is more of a bet on next year instead of this one. There could be some rockier times in between now and then.”

The U.S. Census Bureau September advance report on durable goods manufacturers’ shipments, inventories and orders follows:

New Orders

New orders for manufactured durable goods in September increased $4.3 billion or 1.9 percent to $237.1 billion. This increase, up five consecutive months, followed a 0.4 percent August increase. Excluding transportation, new orders increased 0.8 percent. Excluding defense, new orders increased 3.4 percent. Transportation equipment, up four of the last five months, led the increase by $3.0 billion or 4.1 percent to $76.8 billion.

Shipments

Shipments of manufactured durable goods in September, up four of the last five months, increased $0.7 billion or 0.3 percent to $245.0 billion. This followed a 0.3 percent August decrease. Transportation equipment, also up four of the last five months, led the increase by $0.4 billion or 0.5 percent to $82.0 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in September, down six of the last seven months, decreased $2.6 billion or 0.2 percent to $1,075.7 billion. This followed a 0.6 percent August decrease. Transportation equipment, down seven consecutive months, drove the decrease by $5.2 billion or 0.7 percent to $722.0 billion.

Inventories

Inventories of manufactured durable goods in September, up following three consecutive monthly decreases, increased $1.6 billion or 0.4 percent to $422.1 billion. This followed a 0.1 percent August decrease. Transportation equipment, up 24 of the last 25 months, led the increase by $1.0 billion or 0.7 percent to $147.9 billion.

Capital Goods

Nondefense new orders for capital goods in September increased $6.6 billion or 10.4 percent to $69.7 billion. Shipments increased less than $0.1 billion or 0.1 percent to $70.2 billion. Unfilled orders decreased $0.4 billion or 0.1 percent to $593.5 billion. Inventories increased $0.7 billion or 0.4 percent to $193.8 billion. Defense new orders for capital goods in September decreased $3.0 billion or 22.3 percent to $10.3 billion. Shipments decreased $0.1 billion or 0.7 percent to $12.1 billion. Unfilled orders decreased $1.8 billion or 1.0 percent to $179.5 billion. Inventories increased $0.3 billion or 1.2 percent to $21.5 billion.

Revised August Data

Revised seasonally adjusted August figures for all manufacturing industries were: new orders, $469.6 billion (revised from $470.1 billion); shipments, $481.1 billion (revised from $481.3 billion); unfilled orders, $1,078.3 billion (revised from $1,078.6 billion) and total inventories, $686.7 billion (revised from $686.6 billion).