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Economy in Brief

U.S. Durable Goods Orders Surprise to Upside in October
by Sandy Batten  November 27, 2019

Manufacturers' orders for durable goods unexpectedly rose 0.6% m/m (-0.7% y/y) in October following a downwardly revised 1.4% m/m decline in September. The Action Economics Forecast Survey had anticipated a 0.7% m/m decline for October. Orders for nondefense capital goods excluding aircraft, a key indicator of business investment plans, jumped up a much larger-than-expected 1.2% (-0.8% y/y) in October after having fallen in each of the previous two months. Shipments of nondefense capital goods excluding aircraft, a good indicator of current business capex, rose a solid 0.8% m/m (+0.4% y/y) in October after having fallen for four consecutive months.

While the October rebound in durable goods orders was relatively widely spread, a 7.2% m/m rise in orders for defense goods provided a lot of the boost. Orders excluding defense orders edged up 0.1% m/m (-2.5% y/y) in October. Transportation orders rose 0.7% m/m (-1.4% y/y) with orders ex. transportation increasing 0.6% m/m (-0.4% y/y) in October. Orders for aircraft and parts jumped up 14.1% m/m in October after declines in both September and August with double-digit rises in both defense and nondefense. The GM strike again took its toll on the auto sector with orders for motor vehicles and parts falling 1.9% m/m (-3.7% y/y) in October on top of a 2.9% m/m decline in September.

Orders outside of the transportation sector were mixed in October. Orders for primary metals orders fell 1.4% m/m (-6.4% y/y) and orders for electrical equipment declined 1.7% m/m (+0.8% y/y). In contrast, orders for fabricated metals increased 1.8% m/m (+2.2% y/y), orders for machinery rose 1.3% m/m (-2.0% y/y), and orders for computers and electronic products gained 0.7% m/m (-1.3% y/y).

Durable goods shipments were essentially unchanged (-1.5% y/y) in October after having declined in each of the previous three months. Transportation shipments fell 0.4% m/m on October. Shipments excluding transportation edged up 0.2% m/m following a 0.1% m/m decline in September. Durable goods inventories increased 0.3% m/m in October, boosted mostly by a 1.3% m/m rise in transportation inventories. Inventories excluding transportation fell 0.1% m/m. Unfilled orders edged up 0.1% m/m, due mostly to a 1.7% m/m jump in unfilled defense orders. Unfilled orders excluding defense fell 0.2% m/m, their third consecutive monthly 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 Oct Sep Aug Oct Y/Y 2018 2017 2016
New Orders (SA, % chg) 0.6 -1.4 0.2 -0.7 7.9 5.4 -1.7
  Transportation 0.7 -3.2 0.2 -1.4 9.8 3.2 -0.6
Total Excluding Transportation 0.6 -0.4 0.1 -0.4 6.9 6.5 -2.3
  Nondefense Capital Goods 3.2 -3.4 -3.2 -3.9 5.5 9.1 -5.8
    Excluding Aircraft 1.2 -0.5 -0.8 -0.8 6.0 6.7 -4.5
Shipments 0.0 -0.7 -0.2 -1.5 7.1 4.0 -2.3
Unfilled Orders 0.1 0.0 0.1 -1.6 3.9 1.9 -1.1
Inventories 0.3 0.5 0.3 4.8 4.8 4.5 -3.0
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