Orders for manufactured durable goods increased nicely in September, according to data furnished by the Commerce Department, rising by a more or less in-line 3.7 percent for the month. This report is one of those that had been delayed by the government because of the recent partial shutdown.
In all, orders for such long-lived products as aircraft, appliances, machinery, and autos rose by the aforementioned 3.7 percent to $233.4 billion last month. That was the fifth gain in the past six months for this historically volatile series. Fluctuations can be sizable given the high cost of an airliner, a key component of the total mix. A delay or an acceleration in such orders from month to month can have an exaggerated effect on the aggregate total of orders.
Meantime, transportation equipment, also up in five of the past six months, drove the increase, rising $8.4 billion, or 12.3 percent, to $77.0 billion. This gain was led by rising orders for nondefense aircraft and parts. That component was up by $6.9 billion. If we back out orders for transportation equipment from the total, we find that orders, overall, were essentially flat, being off by 0.1 percent.
Also of note, orders for nondefense capital goods, a good measure of investment spending sentiment, increased by $5.2 billion in September, or $6.9 percent, to $80.7 billion, while defense orders for capital goods rose by 13.4 percent.
On the other hand, orders for fabricated metal products fell slightly, declining by 0.9 percent; machinery orders slumped by 1.8 percent, and capital goods orders, excluding aircraft, were off by 1.1 percent.
Taken as a whole, this was a decent report, suggesting that the economy is continuing to expand, but selectively. In all, we continue to believe that GDP growth will average about 1.5%-2.0% in the current quarter.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.