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Economy in Brief

U.S. Durable Goods Orders Improve Unexpectedly
by Tom Moeller  October 25, 2018

New orders for durable goods increased 0.8% (7.9% y/y) during September following a 4.6% August jump, revised from 4.5%. A 1.9% decline had been expected in the Action Economics Forecast Survey.

The rise in orders was heavily influenced by a 15.8% jump in orders for aircraft & parts which followed a 50.5% surge. Defense aircraft orders more than doubled m/m. Transportation sector orders overall gained 1.9% (11.4% y/y) helped by a 1.3% rise (11.2% y/y) in orders for motor vehicles & parts.

Outside of the transportation sector, durable goods orders ticked 0.1% higher (5.9% y/y) in September after gains of roughly 0.3% in each of the prior four months. These modest increases pulled the three-month rise in orders down to 2.0% (AR) from a high of 15.7% in April.

Weakness in orders in the capital goods sector have played a large role in that slowdown. Overall nondefense capital goods orders declined 2.4% (0.7% y/y) last month after a 7.3% August jump. Outside of aircraft, orders eased 0.1% (+1.9% y/y) following a 0.2% dip. Three-month growth fell to 4.7% from a high of 14.9% as of June.

A 0.7% decline (+5.9% y/y) in fabricated metal orders figured largely in that softening as it followed a 0.6% rise. Orders for electrical equipment & appliances also eased 0.5% (+6.0% y/y), reversing a 0.6% gain. Orders for computers & electronic products were little changed (5.2% y/y) following a 0.7% decline. Orders for computers & electronic products fell 0.4% (+11.7% y/y) after a 1.2% drop. Working higher were machinery orders by 0.8% (0.9% y/y) following a 0.1% uptick. Primary metals orders improved 0.1% (19.5%) following a 1.3% strengthening.

Shipments of durable goods jumped 1.3% (8.1% y/y) after a 0.9% rise. Outside of the transportation sector, shipments rose 0.3% (+6.6% y/y) following a 0.1% uptick. Unfilled orders for durable goods gained 0.8% (4.9% y/y) after a 0.9% rise. Outside of transportation, backlogs rose 0.4% (5.2%), the same as in August. Inventories of durable goods increased 0.7% (4.5% y/y) after a 0.2% drop. Inventories rose 0.6% (5.5% y/y) outside of the transportation sector following a 0.4% rise.

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

The Fed's latest Beige Book covering regional economic conditions can be found here.

Durable Goods NAICS Classification Sep Aug Jul Sep Y/Y 2017 2016 2015
New Orders (SA, % chg) 0.8 4.6 -1.2 7.9 5.4 -1.7 -5.0
  Transportation 1.9 13.2 -3.6 11.4 3.4 -0.7 -6.3
Total Excluding Transportation 0.1 0.3 0.2 5.9 6.5 -2.3 -4.2
  Nondefense Capital Goods -2.4 7.3 -3.7 0.7 9.1 -5.8 -11.8
    Excluding Aircraft -0.1 -0.2 1.5 1.9 6.7 -4.5 -5.5
Shipments 1.3 0.9 -0.1 8.1 4.0 -2.4 -0.8
Unfilled Orders 0.8 0.9 0.1 4.9 2.0 -1.2 -2.7
Inventories 0.7 -0.2 1.3 4.5 4.6 -3.0 0.9
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