Factory Orders Edged Higher in September but Remain Soft Over the Past Year

The Census Bureau said that new factory orders rose 0.3 percent in September, slowing slightly from the 0.4 percent gain seen in August. These data were pulled somewhat lower by a sharp decline in defense aircraft and parts, with transportation equipment orders down 1.1 percent. Excluding transportation, new orders for manufactured goods increased 0.6 percent. Over the longer term, new factory orders have been quite soft over the past 12 months, up 0.6 percent since September 2015 or down 0.1 percent year-over-year with transportation excluded. This suggests broader weaknesses for manufacturers in terms of demand, perhaps highlighting why business leaders in the sector continue to be so cautious.

In this report, sales of nondurable goods increased 0.9 percent, but durable goods activity was off by 0.3 percent. New orders for durable goods excluding transportation were up 0.1 percent. Looking specifically at durable goods sales activity in September, the underlying data were mixed. Demand was stronger for the month for motor vehicles and parts (up 2.6 percent), furniture and related products (up 1.2 percent), machinery (up 1.1 percent) and electrical equipment and appliances (up 0.9 percent). Yet, there were also segments which were weaker, including computers and related products (down 0.9 percent), fabricated metal products (down 0.6 percent) and primary metals (down 0.3 percent).

Meanwhile, shipments of manufactured goods jumped 0.8 percent in September, extending the 0.2 percent increase experienced in August. There were larger shipments for both durable (up 0.8 percent) and nondurable (up 0.9 percent) goods manufacturers in the latest release. Much like the new orders data discussed above, the value of manufactured goods shipments has been less than desired since September 2015. Year-over-year shipments are down 0.6 percent, with a decline of 0.5 percent if transportation equipment is excluded.

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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