September Factory Orders Plunge, with Ex-Transportation Orders Falling Most Ever

New factory orders slid -2.5% MoM in September, much more than the -0.8% MoM drop that had been expected. In addition, August's figure was revised lower to -4.3% MoM from -4% originally, for the largest monthly decline in over 15 years. Excluding the weak transportation sector, new orders fell an even larger -3.7% MoM, just slightly larger than the -3.6% MoM decline in August, and a new record monthly loss. Surprisingly, unfilled orders continued to rise by +0.4% MoM (+12% YoY), while the inventory-to-shipments ratio popped up to 1.29, from 1.26 in August and a recent low of 1.21 in July.

Consumer goods demand remains weak, with new orders falling -5% MoM and shipments declining by -5.2% MoM. Over the past year, both categories have seen growth of 10% YoY.

Capital goods orders rose +3.1% MoM after falling -6% MoM the prior month, and are down -1.1% YoY. Most of this increase was in defense orders, which rose +19.5% MoM (+64% YoY), while non-defense factory orders rose only +0.8% MoM (-7.3% YoY).

Durable goods orders rose +0.9% MoM after falling -5.5% MoM in August, and they are down -3.6% YoY. Transportation equipment rose +6.5% MoM, but is still down -11% YoY. Non-durable goods orders fell -5.5% MoM, the most in two years, due to falling commodity prices.

Factory shipments fell -2.8% MoM after declining by -3.7% MoM in August, but they are up +2.5% YoY.

Inventories fell -0.7% MoM, the first decline in over seven months, but have risen +7% YoY. Durable goods inventories continued to rise, while non-durable manufactured inventories fell due to the decline in oil and other commodity prices

The worldwide economic slowdown, and tighter credit, combined with rapidly falling commodity prices, are quickly sapping notional growth in new factory orders for goods. All signs point to further slowing ahead.