The Census Bureau said that new durable goods orders jumped 3.7 percent in September, well above the 0.2 percent gain seen in August. These two increases followed an 8.1 percent decline in July, suggesting some degree of stabilization. Despite a lot of volatility in the measure, new durable goods sales have risen 7.4 percent year-over-year. At the same time, durable goods sales were 0.7 percent below their peak of 2013, which was reached in May.
Yet, the bulk of the increase in September stemmed from sharply higher aircraft sales, with new transportation equipment orders up 12.3 percent for the month. Motor vehicles sales, which were included in that transportation figure, were off 0.3 percent in September, taking a pause its 12.0 percent year-over-year increase.
If you were to exclude transportation equipment from the analysis, new durable goods orders would have declined by 0.1 percent. This suggests broader weaknesses in the durable goods sector beyond aircraft. Indeed, much of the volatility that we see in new orders has stemmed from transportation sector orders, which have whipsawed the data back and forth.
Looking at other durable goods sectors, new orders data were largely mixed. Stronger sales growth was reported in the computers and related products (up 7.1 percent), communications equipment (up 6.8 percent), and primary metals (up 2.7 percent) sectors. However, these were offset by declining new orders in the machinery (down 1.8 percent), fabricated metal products (down 0.9 percent), electrical equipment and appliances (down 0.3 percent), and other durable goods (down 0.1 percent) segments. Core capital goods, or nondefense capital goods excluding aircraft, were down 1.1 percent, further highlighting softness in overall durable goods sales in September.
Meanwhile, shipments of durable goods rose 0.2 percent in September, extending the 0.8 percent gain of August. The longer-term trend line shows relatively steady, but somewhat modest, upward movement, with shipments up 4.3 percent over the past 12 months. Transportation did not skew the data as much as it did the new orders figures, with shipments excluding transportation up 0.3 percent for the month. The largest increases in shipments for September were in the nondefense aircraft and parts (up 4.3 percent) and computer and related products (up 3.8 percent) sectors.
Chad Moutray is the chief economist, National Association of Manufacturers.
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