The durable goods component, first posted last week, has been revised slightly higher but is still in the minus column at 1.1 percent vs a preliminary minus 1.3 percent. Weakness on the durable side is broad and includes special weakness in capital goods categories which points to weakness in business confidence and business investment.
The non-durable goods component is the new data in today's report and was unchanged in September following declines of 0.4 percent and 0.8 percent in the two prior months. The price plunge for oil is certain to drag down petroleum subcomponents in the October report.
Readings outside of orders are also soft including a 0.1 percent increase in shipments and a 0.3 percent rise in unfilled orders which is the lowest for this reading since February. One plus is that manufacturers are keeping their inventories in check, up only 0.2 percent to keep the inventory-to-shipments ratio unchanged at 1.30.
Hard data on the manufacturing sector, in sharp contrast to many anecdotal samples such as yesterday's ISM report, haven't been showing much second-half momentum. For the next reading on the manufacturing sector, watch for manufacturing hours in Friday's employment report.
Recent History Of This Indicator:
Factory orders--skewed by Boeing airshow orders-fell 10.1 percent in August after soaring 10.5 percent in July. Taken together, the two months point to flat order growth for the nation's manufacturing sector. Excluding transportation, where aircraft orders are tracked, orders edged 0.1 percent lower following a 0.7 percent decline in July. But in a slight offset, orders for nondefense capital goods excluding aircraft -- which is a core reading on business investment -- rose 0.4 percent to more than offset a 0.1 percent decline in the prior month. Another positive in the report was a solid 0.6 percent rise in total unfilled orders, which have been solid and which will give manufacturers some breathing space should new orders remain flat. Turning back to new orders, motor vehicles fell a steep 5.4 percent following July's outsized 7.3 percent gain in volatility likely tied to adjustment issues surrounding this year's later timing of auto retooling. Nondefense aircraft, the wildcard in the July and August reports, showed a 74 percent swing lower following July's 316 percent surge. New orders for total nondurable goods industries fell 0.4 percent following July's 0.8 percent decline, both reflecting price effects on petroleum and coal products. More recently, new factory orders for durables decreased 1.3 percent in September after dropping 18.3 percent in August and spiking 22.5 percent in July.
Factory orders--skewed by Boeing airshow orders-fell 10.1 percent in August after soaring 10.5 percent in July. Taken together, the two months point to flat order growth for the nation's manufacturing sector. Excluding transportation, where aircraft orders are tracked, orders edged 0.1 percent lower following a 0.7 percent decline in July. But in a slight offset, orders for nondefense capital goods excluding aircraft -- which is a core reading on business investment -- rose 0.4 percent to more than offset a 0.1 percent decline in the prior month. Another positive in the report was a solid 0.6 percent rise in total unfilled orders, which have been solid and which will give manufacturers some breathing space should new orders remain flat. Turning back to new orders, motor vehicles fell a steep 5.4 percent following July's outsized 7.3 percent gain in volatility likely tied to adjustment issues surrounding this year's later timing of auto retooling. Nondefense aircraft, the wildcard in the July and August reports, showed a 74 percent swing lower following July's 316 percent surge. New orders for total nondurable goods industries fell 0.4 percent following July's 0.8 percent decline, both reflecting price effects on petroleum and coal products. More recently, new factory orders for durables decreased 1.3 percent in September after dropping 18.3 percent in August and spiking 22.5 percent in July.
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