The Census Bureau said that new durable goods orders fell 2.0 percent in August, essentially offsetting the 1.9 percent increase seen in July. On a year-over-year basis, new orders have fallen 2.3 percent, highlighting the challenges faced by manufacturers over the past 12 months and the soft U.S. and global economic environment that have existed over much of that time. In August, much of the decrease came from the transportation sector (down 5.8 percent), with reduced demand for motor vehicles and parts (down 1.6 percent) and nondefense aircraft (down 5.9 percent) for the month. (Auto sales had jumped 4.9 percent in July, making August’s pullback less severe relatively; whereas, nondefense aircraft have declined for two straight months after soaring from the Paris Air Show in June.) Excluding transportation, new orders for durable goods were unchanged in August.
Looking more closely at the August data, new durable goods orders were mixed. Demand was greater for defense aircraft (up 5.1 percent), machinery (up 1.0 percent), other durable goods (up 0.8 percent) and primary metals (up 0.1 percent). These gains were counteracted, however, by decreased sales for fabricated metal products (down 1.8 percent), electrical equipment and appliances (down 0.6 percent) and computer and electronic products (down 0.2 percent).
Meanwhile, shipments of durable goods were also unchanged in August, slowing after two consecutive months of increases. Nondefense aircraft (up 10.5 percent), computer and electronic products (up 0.8 percent), machinery (up 0.5 percent) and other durable goods (up 0.1 percent) each experienced more shipments for the month. At the same time, there were fewer shipments for defense aircraft (down 4.0 percent), electrical equipment and appliances (down 1.9 percent), motor vehicles and parts (down 1.4 percent) and primary metals (down 1.0 percent. In contrast to decreased new orders year-over-year, shipments have edged marginally higher over the past 12 months, up 0.9 percent. Yet, that figure also suggests weaker-than-desired growth for the manufacturing sector.
Chad Moutray is the chief economist, National Association of Manufacturers.