U.S. Durable Goods Orders Down: Aircraft Orders Quite Volatile

Volatile orders for aircraft & parts dominated the durable goods figures again in August as a 35.1% m/m decline followed a 37.3% July surge. This pulled total durable goods orders down 0.5% last month following a 1.8% jump in July that was little revised. Consensus expectations had been for no change in total August orders. Less aircraft durable orders were quite strong, up 2.5% (11.3% y/y) following a 0.4% decline in July.

Commercial aircraft orders retraced nearly all of the doubling of bookings in July.

The volatility in aircraft orders pulled total nondefense capital goods orders down 7.4%. Less aircraft, capital goods orders still fell 0.5% (11.2% y/y), the fourth monthly decline in the last five.

Orders for computers & electronic products recouped most of a 4.3% decline in July with a 4.1% (+4.3% y/y) August rise. Computer orders only gained back 0.8% (0.3% y/y) of the 5.2% July plunge but orders for communications equipment added 6.8% (1.3% y/y) to the 5.3% July strength. Orders for electrical equipment, appliance & components rose 1.8% (9.2% y/y) after a 6.7% spike in July. Machinery orders were unchanged (17.5% y/y) following moderate gains in the prior three months.

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During the last ten years there has been an 80% correlation between the y/y change in real nonresidential fixed investment in equipment & software and the change in orders for nondefense capital goods. The correlation with shipments has been 93%.

Shipments of durable goods jumped 1.7% (13.4% y/y) following a 0.4% July rise. Shipments excluding the transportation sector, which were pumped by the motor vehicle and the aircraft sectors, rose 0.7% (+14.9% y/y).

Durable inventories rose 0.6% (5.1% y/y) following an upwardly revised 1.1% July spike.