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Economy in Brief

U.S. Durable Goods Orders Decline, Led by Aircraft
by Tom Moeller  November 21, 2018

Weakness in the durable goods manufacturing sector was evident last month as new orders declined 4.4% (+6.7% y/y) following a 0.1% September dip, revised from a 0.7% increase. The decline outpaced expectations for a 2.7% weakening in the Action Economics Forecast Survey.

The decline in orders was pronounced in the transportation sector. A 12.2% drop in bookings was led by a 39.0% decline in aircraft & parts orders. It followed strong gains during the prior two months. Defense aircraft orders plummeted 59.3% and reversed the September rise. Nondefense aircraft orders declined 21.4% and have fallen sharply during three of the last four months. Orders for motor vehicles & parts edged 0.2% higher following a 1.1% increase.

Durable goods orders excluding the transportation sector increased minimally in October (4.4% y/y) and have been moving sideways for the last six months. A 3.2% rise (7.1% y/y) in orders for communications equipment was accompanied by a 1.0% increase (2.1% y/y) in orders for computers & related products. Electrical equipment, appliance and component orders rose 2.9% (6.3% y/y) after a 0.8% decline. Fabricated metals orders also were strong and posted a 1.0% rise (5.1% y/y). These gains were countered by a 2.3% decline (+12.5% y/y) in primary metals orders and a 0.5% easing (+1.1% y/y) in machinery orders.

Nondefense capital goods orders fell 4.2% (+2.4% y/y), held back by the decline in aircraft orders. Orders excluding aircraft were little changed after falling for two straight months. Growth during the last twelve months eased to 3.4% compared to a peak 13.3% y/y gain as of September 2017.

Shipments of durable goods eased 0.6% (+6.8% y/y) after a 1.0% rise. Shipments excluding the transportation sector were little changed (5.4% y/y) for the third straight month. Unfilled orders for durable goods eased 0.2% (+4.8% y/y) following a 0.7% gain. Order backlogs excluding the transportation sector rose 0.2% (4.7% y/y), the weakest rise since February. Inventories of durable goods were fairly steady (4.3% y/y) after a 0.8% rise. Inventories excluding the transportation sector eased 0.2% (+5.0% y/y). Year-to-year growth has been slowing here since early this year.

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 Oct Sep Aug Oct Y/Y 2017 2016 2015
New Orders (SA, % chg) -4.4 -0.1 4.7 6.7 5.4 -1.7 -5.0
  Transportation -12.2 0.9 13.3 11.2 3.4 -0.7 -6.3
Total Excluding Transportation 0.1 -0.6 0.3 4.4 6.5 -2.3 -4.2
  Nondefense Capital Goods -4.2 -3.1 7.4 2.4 9.1 -5.8 -11.8
    Excluding Aircraft -0.0 -0.5 -0.2 3.4 6.7 -4.5 -5.5
Shipments -0.6 1.0 0.9 6.8 4.0 -2.4 -0.8
Unfilled Orders -0.2 0.7 0.9 4.8 2.0 -1.2 -2.7
Inventories -0.0 0.8 -0.2 4.3 4.6 -3.0 0.9
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