The Bureau of Economic Analysis announced that real gross domestic product (GDP) rose 2.8 percent in the fourth quarter. This was mostly in line with forecasts of 3 percent for the quarter. For 2011, real GDP increased 1.7 percent, down from the 3 percent growth rate of 2010.

This quarter’s growth was led by strong increases in fixed investment (including residential), with healthy gains in consumption, inventories and exports. Specifically, consumers contributed 1.45 percentage points (or roughly half) to GDP, with 1.07 percent from durable goods consumption and another 0.27 percent from nondurables. Gross private domestic investment contributed 2.35 percentage points to growth, with the bulk of that coming from the replenishment of inventories. Both residential and nonresidential spending made positive contributions, as well.

Contributions from net exports were slightly negative, with higher imports offsetting the rise in exports. The largest drag on growth, though, came from government contributions. With defense and state and local government spending cuts, government reduced GDP by 0.93 percentage points.

Overall, these numbers reflect the stronger rebound in economic growth at the end of 2011 that many other indicators have reported earlier. Manufacturing activity, in particular, appeared much healthier in November and December than in the mid-months. With moderate growth in consumer and business spending, the economy turned in its fastest growth pace since the second quarter of 2010.

Moving ahead, manufacturers are optimistic about production, employment and capital spending for 2012, and yet, a number of significant headwinds (particularly from Europe) persist. Moreover, the government sector – which is already providing a drag – will continue to dampen GDP, especially as more austerity measures (including defense and other nondiscretionary spending cuts) start to have real effects on the manufacturing community.

Despite the concerns, we are seeing some positive news and reports that manufacturing is strengthening as seen in this report from the Financial Times. While growth may be slow, it is on the rise and it is expected to continue.

Chad Moutray is chief economist, National Association of Manufacturers.

The Census Bureau reported that new orders for durable manufactured goods rose 3 percent in December. While slower than the 4.3 percent growth rate of November, it does mark the second consecutive month of strong gains – a sign that the sector has recovered from weaknesses in the middle of the year. Capital goods orders increased 4.5 percent for the month, or 2.9 percent for nondefense capital goods items excluding aircraft (also known as “core” capital goods).

Overall, there were several areas of strength in the new orders figures. The fastest monthly gains were seen in nondefense aircraft and parts (up 18.9 percent), machinery (up 6 percent) and primary metals (up 5.1 percent). Nonetheless, there were also declines observed in defense aircraft and parts (down 6.8 percent), computers and related products (down 2.6 percent) and fabricated metal products (down 1.4 percent).

Durable goods shipments also rose in December, up 2.1 percent and reversing the 0.3 percent decline last month. Among shipments, defense capital goods had a strong increase of 8.9 percent. Other leading sectors were communication equipment (up 9.6 percent), primary metals (up 8.2 percent), defense aircraft and parts (up 4.9 percent) and machinery (up 4 percent).

Unfilled orders and inventories grew 1.5 percent and 0.3 percent, respectively, in December, continuing a long streak for both of them. (continue reading…)

The Census Bureau reported that new orders for manufactured goods fell 0.4 percent, with both durables and nondurables declining for the month, down 0.5 percent and 0.3 percent. All percentages are expressed in annual terms. This was the second consecutive month with a decrease, and it was led by steep drop in transportation, down 5.1 percent.  If transportation numbers were excluded, new orders would have increased by 0.2 percent.

Note that today’s numbers reflect more complete information, as the durable goods orders were initially pegged at being down 0.7 percent. As I noted at the time, airplane orders can be sporadic, and recent transactions should improve these figures when the data for November are released on December 23.

There were some areas of strength reflected in new order sales for October. These include primary metals (up 3 percent), machinery (up 2.9 percent) and computers and electronics (up 0.8 percent). Within the transportation sector, motor vehicle orders rose 2.3 percent, reversing declines in the previous two months.

Meanwhile, shipments of manufactured goods increased 0.6 percent in October, up for the fifth consecutive month. Durable goods shipments increased 1.6 percent, with nondurables falling 0.3 percent. Major industries with the fastest growth in shipments for the month included transportation (up 5 percent, led by strong growth in autos and nondefense aircraft), primary metals (up 3.2 percent) and computers and electronics (up 1.8 percent).

Chad Moutray is chief economist, National Association of Manufacturers.

The Census Bureau reported that new orders for durable manufactured goods fell 0.7 percent in October, but the decline was mostly attributable to nondefense aircraft. (All percentages are in annual terms.) Airplane orders are sporadic, creating a lot of volatility in these numbers. (Note that Boeing just received an order for 230 planes from Lion Air, which will show up in the November shipments data.) Outside of aircraft, the transportation sector had stronger gains, with new orders for motor vehicles rising 6.2 percent.  When you exclude transportation from the durable goods numbers, new orders rose 0.7 percent.

Other sectors with strong new order gains for the month included primary metals (up 3 percent), machinery (up 1.6 percent) and all other durable goods (up 1.2 percent). In addition to transportation, other areas with the largest weaknesses for new orders were capital goods (down 6.2 percent), electrical equipment (down 5.2 percent) and communications equipment (down 1.6 percent).

I focus on new orders because it is a good proxy for future production, but this report also notes current activity. Shipments of durable goods increased 1.3 percent in October, reversing the decline from September of 0.5 percent. In this case, the transportation sector led the pack with 5.2 percent higher shipments than the previous month, including 6.4 percent and 8.6 percent gains in motor vehicles and nondefense aircraft shipments, respectively. 

Unfilled orders and inventories grew 0.2 percent and 0.5 percent, respectively, in October, continuing a long streak for both of them.

Overall, this report is more positive than the headline number suggests, and yet, the lower capital goods figures suggest that weaknesses persist in the sector. Excluding aircraft, new orders and shipments for capital goods were down 1.8 percent and 1.1 percent, respectively. Moving forward, a stronger recovery will hinge on those numbers turning around.

The U.S. economy picked up the pace in the third quarter, growing 2.5 percent in advance estimates released this morning from the Bureau of Economic Analysis. This represents the fastest pace this year, with the economy only growing 0.4 and 1.3 percent, respectively, in the first two quarters of this year.

Healthy increases in personal consumption, fixed investment and net exports accounted for the bulk of the real GDP rise. In fact, consumption alone contributed 1.72 percent of real GDP’s growth in the quarter; however, all but 0.35 percent of that was from services.

Manufactured goods did provide a positive contribution both from the sale of more durable goods (contributing 0.31 percent to real GDP) and increased goods exports (contributing 0.45 percent). Meanwhile, inventory reductions subtracted a percentage point from real GDP as businesses moved to reduce their supplies.

Looking at the percentage changes in various components of the GDP release, durable goods consumption was up 4.1 percent in the third quarter, compared to an increase of 0.2 percent for nondurables. The contributions from trade were positive, with goods exports (up 4.7 percent) outpacing goods imports (up 1.8 percent).  (continue reading…)

Today’s durable goods orders release from the U.S. Census Bureau shows 0.8 percent decline in September. (All percentages are in annual terms.) This number only tells part of the story, though, as much of the decline was due to volatility in the transportation sector. Excluding transportation, new orders for manufactured durable goods would have increased by 1.7 percent.  Much of the decline was in the aerospace sector (both for defense and nondefense), which fell significantly after a large rise in August. New orders for motor vehicles also fell by 2.7 percent.

Yet, outside of transportation, the new orders figures reflected some strength. Here are the monthly growth rates for new orders from the major sectors:

• Capital Goods, excluding Aircraft, up 2.4 percent;
• Computers and Electronic Products, up 1.0 percent;
• Defense Capital Goods, up 8.6 percent;
• Electrical Equipment, Appliances, and Components, up 1.9 percent;
• Fabricated Metal Products, up 1.9 percent;
• Machinery, up 1.8 percent; and
• Primary Metals, up 2.6 percent.

These numbers suggest that the larger durable goods industry is showing some broader-based growth as we move into the autumn months.

Looking at other parts of this release, durable goods shipments fell 0.7 percent in September; excluding the transportation sector, shipments would have decreased 0.1 percent. Transportation shipments were down 2.7 percent. The largest increases in shipments were seen in communications equipment, computers and related products, fabricated metal products and primary metals.

Both unfilled orders and inventories continued to grow in September, by 0.8 percent and 0.1 percent, respectively.

Chad Moutray is chief economist, National Association of Manufacturers.

Today’s manufacturing numbers have a bit of déjà vu to them, with industrial production up at the same time that business conditions in the New York region continues to contract.

First, the Federal Reserve reported that industrial production rose 0.2 percent in September, with the August figures revised to indicate that there was no change last month. The numbers in August had previously been reported to be up 0.2 percent. For the manufacturing sector, production rose 0.4 percent in September, building on the 0.7 percent and 0.3 percent increases in July and August. Year-over-year growth in manufacturing production is nearly 4 percent.

Meanwhile, manufacturers’ capacity utilization increased 0.1 percent, from 77.3 in August to 77.4 in September.

Examining the different sectors, the picture is more mixed. Eleven of the sectors experienced gains in production, and eight had declines. Durable and nondurable goods production were up 0.6 percent and 0.2 percent. The sectors with the greatest increases were: wood products (up 2.4 percent), aerospace and miscellaneous transportation (up 2.3 percent), electrical equipment and appliances (up 1.3 percent), paper (up 1.1 percent) and computer and electrical products (up 1 percent). The largest declines were in furniture and related products (down 2.2 percent), apparel and leather (down 1.2 percent) and nonmetallic mineral products (down 0.9 percent).

Overall, these numbers show that manufacturing has experienced reasonable growth in the third quarter of 2011. Manufacturing industrial production is 1.4 percent higher in September than in June (or 5.75 percent at an annual growth rate). That is impressive, and a sign that the sector is starting to improve after a weak second quarter. The durable goods sectors have helped to add significantly to those totals. Moving forward, it will be important for these numbers to continue this growth. (continue reading…)

The Census Bureau reported that new orders for durable goods fell 0.1 percent in August, reversing the 4.1 percent gain last month (All rates of growth are in annual terms). These figures have been highly volatile over the past couple years, up one month and then down the next. Despite this month’s decrease, durable goods new orders are 10.1 percent higher in 2011 than at the same time in 2010.

As the monthly numbers suggest, the sector-specific figures were mixed. The strongest gains for new orders came from the nondefense aircraft and parts (up 23.5 percent), defense aircraft and parts (up 22.5 percent), communications equipment (up 7.8 percent), computers and related products (up 5.5 percent) and nondefense capital goods (up 5.2 percent). These were offset by declines in motor vehicle and parts (down 8.5 percent), defense capital goods (down 5.7 percent), primary metals (down 0.8 percent) and fabricated metal products (down 0.7 percent).

Manufacturers’ shipments were down by 0.2 percent in August, retreating from three consecutive months of increases. These losses were led by the motor vehicle sector, but offset by gains in the shipments of aircraft and machinery. Unfilled orders and inventories both rose by 0.9 percent for the month.

Overall, these figures provide both good and bad news. While the headline number was down, which is quite discouraging, there was definite strength in the aircraft, computers and capital goods sectors.  This is a good sign on the health of those sectors. Machinery did well, too, particularly in terms of shipments for the month. While metals and motor vehicles experienced decreases in new orders and shipments for the month, the larger picture is a positive one for them, as their year-to-date gains are impressive and a sign of a larger rebound, particularly for automobiles.

Of course, recent manufacturing survey data suggest continued weaknesses in terms of production and new orders. For the entire industry to experience a rebound moving forward, many of the sentiment surveys out there will need to reverse course. With that said, durable goods industries have been more resilient than others.

Chad Moutray is chief economist, National Association of Manufacturers.

Could it be that we are finally getting some good news in manufacturing? Once again, official government statistics digress from the regional surveys, much as we saw with last week’s industrial production figures from the Federal Reserve Board. Today’s news comes from the Census Bureau in the Durable Goods Report.

Orders for new durable goods rose 4 percent in July, according to advanced numbers from Census (All rates of growth are in annual terms). This reverses the decline in June. The large increase, though, was largely due to significant rises in new sales of motor vehicles (up 11.5 percent) and nondefense aircraft (up 43.4 percent).

Excluding the transportation sector, new durable goods orders rose 0.7 percent. Other major sectors had mixed results, with gains in primary metals (up 10.3 percent) and capital goods (up 1.3 percent) being offset by declines in computers and electronic products (down 3.4 percent), electronics and appliances (down 1.8 percent) and machinery (down 1.5 percent).

Manufacturers’ shipments were up 2.5 percent, stronger than the two previous months (which were also positive). Meanwhile, both unfilled orders and inventories also rose, up 0.7 percent and 0.8 percent, respectively. Again, these numbers were led by the transportation sector, including automobiles and aircraft.

Overall, these numbers are positive news for the durable goods sector, with rebounded sales of motor vehicles being a sign that that industry is recovering. With that said, the larger picture for durable goods is mixed, and it would have been nice to see stronger growth across-the-board. So, even in this good news, there are signs which are less encouraging.

Chad Moutray is chief economist, National Association of Manufacturers.

The Census Bureau reported this morning that durable goods orders rose 1.9 percent in May, rebounding slightly from its 2.7 percent decline in April. The largest mover in this data was the transportation sector, which had been hard hit in previous months due to supply chain disruptions and was up 5.8 percent in May. Excluding transportation, new orders were up 0.6 percent.

Overall, these numbers show that manufacturing is starting to get back on track to where they were before the Japanese disaster, with durables helping to lead the recovery.

In addition to stronger numbers in transportation, other manufacturing sectors also experienced healthy increases in new orders in May. These include capital goods (up 5.6 percent); communications equipment (3.6 percent); electrical equipment, appliances, and components (up 3.2 percent); primary metals (up 1.8 percent); computers and related products (up 1.3 percent); and machinery (up 1.2 percent).

In addition to new orders, shipments, unfilled orders, and inventories were also up (0.3 percent, 0.9 percent, and 1.2 percent, respectively). Computers and related products and machinery were the two sectors that boasted the largest increases in both shipments and unfilled orders for the month.

In related news, the Bureau of Economic Analysis today revised its numbers for first quarter 2011 real gross domestic product. Real GDP is now said that have grown 1.9 percent, up from 1.8 percent as reported earlier.

Output growth was led by healthy increases in personal consumption, fixed investment (excluding nonresidential structures), and exports. Durable goods consumption, for instance, grew 9.3 percent from the previous quarter, and exports increased 7.6 percent.  However, decreases in government spending and strong import growth offset some of these gains.

Chad Moutray is chief economist, National Association of Manufacturers.