Orders for Durable Goods continued to decline in September. The market had been looking for a rebound of +1.5% MoM following the revised worse -5.3% MoM drop in August. Instead, orders fell an additional -1.7% MoM in September (-8.4% YoY).
Demand for business equipment did rise, but surprisingly military demand slumped. If defense orders, which fell -39% MoM and are down -63% YoY, are excluded, durable goods orders rose +.7% MoM. Rising machinery (+4.3% MoM) and computer demand (+1.1% MoM) suggest companies continue to invest in capital improvements, though overall capital goods orders fell -1.3% MoM, and are down -19.5% YoY. The majority of the decline has been in non-defense, which has fallen -12% YoY. The auto sector remains weak, falling another -2.9% in September, after dropping -8.2% in August. Auto companies continue to scale back production. Demand for construction equipment has definitely eased as the housing market slows.
Transportation orders fell -6.3% MoM and are down -23% YoY. Excluding transportation , which tend to be volatile because of the airliner demand, orders rose a smaller than expected +.3% MoM (consensus +.7%), and are only down -1.2% YoY. Orders for commercial aircraft rose 18% in September after dropping -41% in August. Boeing continues to work through a record order backlog as demand for transportation in emerging economies, such as China, expands rapidly.
Shipments fell -2% MoM and are down -1.1% YoY. This is the second month in a row that shipments have declined, and is primarily driven by lower vehicle demand. The largest declines in shipments were in semiconductors (-16% MoM), transportation (-5% MoM) in both autos and aircraft, and defense (-4.6% MoM).
Inventories rose +.4% MoM and are up +2.8% YoY. Unfilled orders rose +1.6% MoM (+18% YoY) with most of the increase in non-defense capital goods which are up +31% YoY. The inventory-to-shipments ration rose to 1.48 from 1.45 the prior month. The low for the past six months was 1.42 in July. Not clear if this renewed inventory accumulation is desired or not.
Net, the headline figure was much weaker than expected, and shows a continuing slump in demand as credit conditions have tightened. The bright spot was continued growth in demand for core capital goods (excludes defense and aircraft). The Fed will pay attention to signs of slowing consumer and business spending.
New Orders for Durable Goods, Yr/Yr%
Demand for business equipment did rise, but surprisingly military demand slumped. If defense orders, which fell -39% MoM and are down -63% YoY, are excluded, durable goods orders rose +.7% MoM. Rising machinery (+4.3% MoM) and computer demand (+1.1% MoM) suggest companies continue to invest in capital improvements, though overall capital goods orders fell -1.3% MoM, and are down -19.5% YoY. The majority of the decline has been in non-defense, which has fallen -12% YoY. The auto sector remains weak, falling another -2.9% in September, after dropping -8.2% in August. Auto companies continue to scale back production. Demand for construction equipment has definitely eased as the housing market slows.
Transportation orders fell -6.3% MoM and are down -23% YoY. Excluding transportation , which tend to be volatile because of the airliner demand, orders rose a smaller than expected +.3% MoM (consensus +.7%), and are only down -1.2% YoY. Orders for commercial aircraft rose 18% in September after dropping -41% in August. Boeing continues to work through a record order backlog as demand for transportation in emerging economies, such as China, expands rapidly.
Shipments fell -2% MoM and are down -1.1% YoY. This is the second month in a row that shipments have declined, and is primarily driven by lower vehicle demand. The largest declines in shipments were in semiconductors (-16% MoM), transportation (-5% MoM) in both autos and aircraft, and defense (-4.6% MoM).
Inventories rose +.4% MoM and are up +2.8% YoY. Unfilled orders rose +1.6% MoM (+18% YoY) with most of the increase in non-defense capital goods which are up +31% YoY. The inventory-to-shipments ration rose to 1.48 from 1.45 the prior month. The low for the past six months was 1.42 in July. Not clear if this renewed inventory accumulation is desired or not.
Net, the headline figure was much weaker than expected, and shows a continuing slump in demand as credit conditions have tightened. The bright spot was continued growth in demand for core capital goods (excludes defense and aircraft). The Fed will pay attention to signs of slowing consumer and business spending.
New Orders for Durable Goods, Yr/Yr%
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