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Economy in Brief

U.S. Durable Goods Orders Decline Is Broad-Based
by Tom Moeller  October 27, 2015

New orders for durable goods fell 1.2% during September (-3.0% y/y) following a 3.0% August drop, revised from -2.0%. Expectations had been for a 1.0% decline in the Action Economics Forecast Survey. During the last ten years, there has been an 88% correlation between the y/y change in durable goods orders and the change in real GDP. Weakness in durable goods bookings was pervasive during both Q3 and Q2.

Last month's decline was paced by a 7.6% drop (-13.2% y/y) in orders for nondefense capital goods. A 35.7% drop (-37.2% y/y) in aircraft & parts led the decline. Nondefense capital goods orders excluding aircraft & parts eased 0.3% (-7.3% y/y) after a 1.6% shortfall. Elsewhere in the transportation sector, motor vehicle & parts orders increased 1.8% (13.1% y/y). Overall orders excluding the transportation sector eased 0.4% (-5.3% y/y). They improved 0.2% during all of last quarter after a 0.6% dip in Q2.

In most other durable goods sectors, orders were soft. Primary metals orders fell 2.9% (-18.7% y/y), the fourth decline in as many months. Fabricated metals orders did rise 1.7% (-3.9% y/y), but the gain followed two months of sharp decline. Machinery orders fell 1.3% (-8.8% y/y) after a 1.0% drop. Computer & electronic product bookings declined 0.6% (+4.8% y/y) after being roughly unchanged in August. Computer & related product orders fell 4.5% (-9.0% y/y), down hard for the third straight month. Communications equipment orders bucked these negative readings with a 2.4% gain (9.4% y/y). Electrical equipment orders also improved, but by just 0.3% (-8.5% y/y).

Shipments of durable goods gained 0.2% (0.7% y/y) following a 0.5% decline. Shipments excluding transportation eased 0.1% (-3.5% y/y), off for the third straight month. Unfilled durable goods orders fell 0.6% (-2.2% y/y) while backlogs excluding transportation declined 0.3% (-1.6% y/y), off for the eighth straight month. Decumulation of inventories continued for the fourth month in the last five. A 0.3% decline left them up, however, 1.7% y/y. Inventories excluding transportation gained 0.1% (0.3% y/y) following two months of decline.

The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.

Durable Goods NAICS Classification Sep Aug Jul Sep Y/Y 2014 2013 2012
New Orders (SA, %) -1.2 -3.0 1.9 -3.0 6.8 2.2 6.3
  Transportation -2.9 -6.9 4.9 2.1 6.1 6.5 16.6
Total Excluding Transportation -0.4 -0.9 0.4 -5.3 7.2 0.1 2.0
  Nondefense Capital Goods -7.6 -4.7 0.6 -13.2 6.6 2.8 10.8
    Excluding Aircraft -0.3 -1.6 1.9 -7.3 6.3 -1.0 7.6
Shipments 0.2 -0.5 1.0 0.7 4.8 2.0 6.3
Inventories -0.3 -0.2 -0.2 1.7 6.1 2.4 3.8
Unfilled Orders -0.6 -0.3 0.2 -2.2 11.4 6.4 7.5
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