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Economy in Brief

U.S. Durable Goods Orders Post Solid Rise in October
by Sandy Batten  November 23, 2022

• Orders increased a larger-than-expected 1.0% m/m and 0.5% excluding transportation.

• Total manufacturing shipments rose 0.7% m/m.

• Both core capital goods shipments and orders bounced back in October after declines in September.

Activity in the factory sector showed a little more vitality in October. New orders for durable goods increased a larger-than-expected 1.0% m/m (10.7% y/y) following a slightly downwardly revised 0.3% monthly increase in September (initially reported as 0.4% m/m). Transportation orders posted a second consecutive solid monthly rise, increasing 2.1% m/m in October on top of a 2.5% monthly increase in September, thereby contributing meaningfully to the rise in total orders. When these orders are excluded from the total, the remainder still rose a respectable 0.5% m/m increase (+4.9% y/y), also well above expectations. The Action Economics Forecast Survey had looked for a 0.2% m/m rise in total orders and a 0.1% increase in orders excluding transportation.

Across sectors, the October increase was widely spread with orders of primary metals the only major category reporting a monthly decline for October. Machinery orders rose 1.5% m/m. Orders for computers and related products jumped up 4.7% m/m in October following monthly declines in both August and September. The increase in transportation orders reflected a 0.6% m/m increase in orders for motor vehicles and parts and a 10.2% m/m jump in aircraft orders (with increases in both defense and nondefense).

The news on capital goods shipments and orders also improved markedly in October following declines in September. Orders for nondefense capital goods excluding aircraft rebounded 0.7% m/m (6.6% y/y) in October after a 0.8% monthly decline in September. Shipments of nondefense capital goods excluding aircraft is a good coincident indicator of business spending on equipment in the national accounts. It jumped up 1.3% m/m (10.3% y/y) in October, more than offsetting its 0.1% m/m decline in September. The level of core capital goods shipments is already almost as far above the Q3 average as the Q3 figure exceeded the Q2 average. This provides a very good starting point for another solid quarter of business spending on equipment (real business spending on equipment in the national accounts increase 10.8% q/q saar in Q3).

Total manufacturing shipments increased 0.7% m/m (10.7% y/y) in October following an upwardly revised 0.3% m/m gain in September (initially 0.2% m/m). Shipments of durable goods rose 0.4% m/m while shipments of nondurable goods increased 1.0% m/m. Durable goods shipments excluding transportation increased 0.4% m/m with shipments of transportation equipment rising 0.3% m/m. Shipments of fabricated metal products was the only major category to report a monthly decline in shipments in October, down 0.2% m/m for the third consecutive monthly decline.

Unfilled orders for durable goods gained 0.6% m/m (7.1% y/y) last month following a 0.5% monthly increase in September. Unfilled orders are not calculated for nondurable goods.

Durable goods inventories edged up 0.2% (6.7% y/y) in September, the same monthly gain as in September. Nondurable goods inventories rose 0.9% m/m (8.5% y/y), their first monthly gain in four months.

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

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