New Durable Goods Orders Continue to Disappoint in September

The Census Bureau said that new durable goods orders continue to disappoint in September. New orders were off 0.1 percent, edging down from $227.6 billion to $227.3 billion. On a year-over-year basis, sales have increased 1.6 percent since September 2015, up from $223.7 billion. However, these data have been skewed by volatility in the transportation equipment segment. In September, transportation equipment orders fell 0.8 percent, largely on reduced activity for defense aircraft and parts. Excluding transportation, new orders for durable goods were up 0.2 percent in September, but over the past 12 months, they were essentially unchanged, down 0.04 percent.

As such, the broader demand for durable goods over the past year remained weak, highlighting ongoing challenges in the sector. Along those lines, core capital goods orders (or nondefense capital goods excluding aircraft) declined 1.2 percent in September, with a year-over-year decrease of 4.1 percent.

Looking more closely at the various durable goods sectors, the data were mixed in September. On the positive side of the ledger, new orders were higher in this report for electrical equipment and appliances (up 1.5 percent), machinery (up 1.2 percent), motor vehicles and parts (up 1.2 percent) and other durable goods (up 0.7 percent). In contrast, computers and electronic products (down 1.0 percent), fabricated metal products (down 0.4 percent) and primary metals (down 0.3 percent) each reported lower demand for the month.

Meanwhile, durable goods shipments rebounded, up 0.8 percent in September, after being unchanged in August, buoyed by stronger automotive and nondefense aircraft sales. Excluding transportation equipment, shipments of durable goods inched up 0.1 percent. Since September 2015, durable goods shipments have fallen 1.1 percent, matching the decline seen when excluding transportation equipment.

In September, increased shipments for nondefense aircraft and parts (up 9.1 percent), motor vehicles and parts (up 1.2 percent), other durable goods (up 0.7 percent), electrical equipment and appliances (up 0.6 percent) and primary metals (up 0.2 percent) were enough to offset declines for defense aircraft and parts (down 8.2 percent), computers and electronic products (down 0.5 percent), fabricated metal products (down 0.2 percent) and machinery (down 0.1 percent).

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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