New Factory Orders Edged Down 0.1 Percent in October, but Year-Over-Year Growth Remains Encouraging

The Census Bureau said that new factory orders edged down 0.1 percent in October, easing off ever-so-slightly after jumping by 1.2 percent and 1.7 percent in both August and September, respectively. In October, nondurable goods orders were up by 0.7 percent, with new sales for durable goods off 0.8 percent. The decline for durable goods in October stemmed largely from significant declines in defense and nondefense aircraft and parts orders, which can often be highly volatile from month to month. (The November numbers should rebound strongly on healthy airplane demand at the Dubai Airshow.) Excluding transportation equipment, new orders were up 0.8 percent in October, rising for the fourth consecutive month.

Overall, new factory orders – which have struggled mightily over the past couple years – have largely trended in the right direction more recently, up nearly 3.7 percent since October 2016, or 6.8 percent with transportation equipment sales excluded.  

Looking specifically at durable goods activity in October, the data were mostly higher. Demand was stronger for furniture and related products (up 1.9 percent), machinery (up 1.9 percent), primary metals (up 1.4 percent), motor vehicles and parts (up 1.3 percent), electronic equipment and appliances (up 0.8 percent) and computers and electronic products (up 0.7 percent), with softer sales for fabricated metal products (down 0.5 percent), among others. Core capital goods—or nondefense capital goods excluding aircraft—rose by 0.3 percent in October, with a robust gain of 9.3 percent over the past 12 months.

Meanwhile, shipments of manufactured goods increased by 0.6 percent in October, rising for the sixth straight month. Durable and nondurable goods orders were up by 0.4 percent and 0.7 percent, respectively. On a year-over-year basis, factory shipments have risen 5.8 percent since October 2016, or 6.5 percent with transportation 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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