Durable Goods Orders Bounced Back in August, with Strong Year-Over-Year Growth

The Census Bureau said that growth in new durable goods orders increased by 1.7 percent in August, bouncing back somewhat after dropping 6.8 percent in July. This data has been highly volatile over the past three months, largely on large swings in nondefense aircraft and parts orders, which are often bulked together surrounding major trade shows. Excluding transportation equipment, new durable goods orders were up by 0.2 percent in August, easing from the 0.8 percent gain seen in July. New durable goods orders have generally trended in the right direction over the course of the past 12 months. New durable goods have risen 5.1 percent since August 2016, or excluding transportation equipment, the year-over-year gain was 6.1 percent.  

Looking more closely at the various durable goods sectors in August, the data were mostly higher. There were increased sales for motor vehicles and parts (up 1.5 percent), computers and electronic products (up 1.3 percent), machinery (up 0.3 percent) and primary metals (up 0.3 percent). In contrast, there were reduced orders for fabricated metals products (down 0.4 percent), with other durable goods demand unchanged. The bottom line is that new orders for core capital goods (or nondefense capital goods excluding aircraft) increased by 0.9 percent in August. This figure is often seen as a proxy for capital spending in the U.S. economy. On a year-over-year basis, core capital goods have risen 3.6 percent, up from $62.5 billion in August 2016 to $64.8 billion in this release.

Meanwhile, durable goods shipments were up by 0.3 percent in August. Much like the new orders data described above, the long-term picture continues to be quite favorable. Since August 2016, durable goods shipments have risen at decent rates, up 4.5 percent, with year-over-year growth of 5.7 percent when transportation equipment shipments were excluded. In addition, shipments of core capital goods have also improved over the past 12 months, up 6.5 percent year-over-year.

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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