The Census Bureau said that new durable goods orders rose 0.1 percent in August. In essence, they were essentially unchanged. The good news was that this followed an 8.1 percent decline in July, suggesting some stabilization. Yet, such figures indicate that sales growth for durable goods industries has stalled of late. Still, the trend remains a positive one, with new orders up 4.6 percent since January, but with pretty extensive volatility over the past year and a half (as can be seen in the attached graphic).
In past months, much of that volatility has stemmed from transportation sector orders, which have whipsawing the data back and forth. In August, the impact was less noticeable, but still present. Transportation sales rose 0.7 percent for the month, with higher motor vehicle orders offsetting weaker aircraft sales. Excluding transportation, new durable goods orders would have fallen by 0.1 percent, suggesting broader weaknesses in the manufacturing sector. Since January, non-transportation durable goods orders have risen just 0.8 percent.
Looking at other durable goods sectors, new orders data were largely mixed. Stronger sales growth was reported in the computers and related products (up 7.8 percent), machinery (up 0.9 percent), other durable goods (up 0.9 percent), and fabricated metal products (up 0.3 percent) sectors. However, these were largely offset by declining new orders in communications equipment (down 1.7 percent), primary metals (down 0.5 percent), and electrical equipment and appliances (down 0.5 percent) segments.
Meanwhile, shipments of durable goods rose 0.9 percent in August, the first gain since May. It followed declines of 0.1 percent in both June and July. The longer-term trend line shows relatively steady, but somewhat modest, upward movement, with shipments up 3.0 percent since January. In August, the news was largely positive, with shipments of aircraft being the primary drag. The largest gains were seen in transportation equipment (up 1.5 percent), computer and electronic products (up 1.3 percent), other durable goods (up 1.0 percent), primary metals (up 0.9 percent), and machinery (up 0.4 percent).
In summary, durable goods sales figures were somewhat disappointing in August, particularly when you look at the broader market. New orders excluding transportation have increased very slowly in the first eight months of 2013, a sluggishness which does not bode well for future growth in production and shipments. Yet, manufacturers continue to cautiously optimistic that sales will pick up in the coming months, as noted in many of the sentiment surveys. For that to be true, the current stagnation in the broader sector will need to turn around – something that could be assisted with smart policymaking from Washington, DC.
Chad Moutray is the chief economist, National Association of Manufacturers.
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