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Last Update: 25-Oct-12 08:53 ET
Durable Orders Headline Gain Masks a Weak Manufacturing Sector
Durable goods orders rebounded and increased 9.9% in September after falling 13.1% in August. The Briefing.com consensus expected durable orders to increase 8.0%. The September orders report is a perfect example of why the headline numbers reported in the media are not a good indication of actual manufacturing demand trends. In this case, overall manufacturing demand is extremely weak. Aircraft orders, which dropped 97.2% in August, increased an astounding 2,640.7% in September.
This gain was foreshadowed by the Boeing (BA) orders report that showed demand for aircraft increasing from 1 plane in August to 143 planes in September. Excluding transportation, orders increased 2.0% in September, up from -2.1% in August. The Briefing.com consensus expected these orders to increase 1.0%. The entire increase in these orders came from a 4.1% increase in primary metals and a 9.2% increase in machinery. All other manufacturing sectors posted orders declines in September, which explains that demand for manufacturing goods is extremely limited at this time. Orders of nondefense capital goods excluding aircraft, a proxy for nonresidential investment demand, were flat in September after increasing a modest 0.2% in August. Shipments, which factor into third quarter GDP, were down 0.3%.
This gain was foreshadowed by the Boeing (BA) orders report that showed demand for aircraft increasing from 1 plane in August to 143 planes in September. Excluding transportation, orders increased 2.0% in September, up from -2.1% in August. The Briefing.com consensus expected these orders to increase 1.0%. The entire increase in these orders came from a 4.1% increase in primary metals and a 9.2% increase in machinery. All other manufacturing sectors posted orders declines in September, which explains that demand for manufacturing goods is extremely limited at this time. Orders of nondefense capital goods excluding aircraft, a proxy for nonresidential investment demand, were flat in September after increasing a modest 0.2% in August. Shipments, which factor into third quarter GDP, were down 0.3%.
