U.S. Durable Goods Orders Soar 4.5.% Vs 1.9% Expected In August

by Ike Obudulu Posted on September 27th, 2018

Washington, D.C., USA: New Orders New orders for manufactured durable goods in August increased $11.1 billion or 4.5 percent to $259.6 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 1.2 percent July decrease.

The consensus forecast from economists had expected new orders for manufactured durable goods in June to decrease by 1.9%%

Excluding transportation, new orders increased 0.1 percent. Excluding defense, new orders increased 2.6 percent. Transportation equipment, also up two of the last three months, led the increase, $10.9 billion or 13.0 percent to $95.3 billion.

Shipments of manufactured durable goods

Shipments of manufactured durable goods in August, up three of the last four months, increased $1.9 billion or 0.8 percent to $253.1 billion. This followed a 0.1 percent July decrease. Transportation equipment, up two of the last three months, led the increase, $1.6 billion or 1.9 percent to $86.0 billion.

Unfilled orders for manufactured durable goods

Unfilled orders for manufactured durable goods in August, up nine of the last ten months, increased $10.4 billion or 0.9 percent to $1,176.5 billion. This followed a 0.1 percent July increase. Transportation equipment, up six of the last seven months, led the increase, $9.3 billion or 1.2 percent to $811.0 billion.

Inventories of manufactured durable goods

Inventories of manufactured durable goods in August, down following nineteen consecutive monthly increases, decreased $1.4 billion or 0.4 percent to $407.0 billion. This followed a 1.2 percent July increase. Transportation equipment, down two of the last three months, drove the decrease, $1.8 billion or 1.4 percent to $129.3 billion.

Nondefense new orders for capital goods

Nondefense new orders for capital goods in August increased $5.7 billion or 7.6 percent to $81.3 billion. Shipments increased $2.2 billion or 3.0 percent to $77.3 billion. Unfilled orders increased $3.9 billion or 0.5 percent to $718.6 billion. Inventories decreased $1.3 billion or 0.8 percent to $177.4 billion. Defense new orders for capital goods in August increased $4.9 billion or 44.4 percent to $16.0 billion. Shipments increased $0.1 billion or 1.2 percent to $11.6 billion. Unfilled orders increased $4.4 billion or 3.0 percent to $151.5 billion. Inventories decreased $0.2 billion or 0.8 percent to $22.6 billion.

Revised July data

Revised seasonally adjusted July figures for all manufacturing industries were: new orders, $499.1 billion (revised from $497.8 billion); shipments, $501.8 billion (revised from $501.7 billion); unfilled orders, $1,166.1 billion (revised from $1,164.9 billion) and total inventories, $675.7 billion (revised from $675.8 billion). Revised and more detailed estimates, plus nondurable goods data, will be published on October 4, 2018, at 10:00 a.m. EDT

Figures in text are adjusted for seasonality, but not for inflation. Figures on new and unfilled orders exclude data for semiconductor manufacturing. “Virtually unchanged” indicates that the change is less than 0.05 percent for a percent increase or decrease.

The Manufacturers’ Shipments, Inventories, and Orders (M3) survey or the Durable Goods Orders Report

The Manufacturers’ Shipments, Inventories, and Orders (M3) survey or the Durable Goods Orders Report provides broad-based, monthly statistical data on economic conditions in the domestic manufacturing sector. The survey measures current industrial activity – change in the total value of new purchase orders placed with manufacturers for durable goods – and provides an indication of future business trends.

The data can be volatile and revisions via the Factory Orders report released about a week later are not uncommon. Moving averages should be used to identify long-term trends.

Durable goods are generally defined as higher-priced capital goods orders with a useful life of three years or more

Durable goods are defined as hard products (capital goods) having a life expectancy of three years or more years, such as automobiles, computers, appliances, airplanes, semiconductor equipment and turbines.

The report is issued monthly by the Census Bureau of the U.S. Department of Commerce.

‘Actual’ greater than ‘Forecast’ is good for the dollar and vice versa.  A weak durable goods report will also generally lead to a decline on the bond market.

Core Durable Goods Orders Report

Core Durable Goods Orders report measures change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items.

Orders for aircraft are volatile and can severely distort the underlying trend. The Core data is therefore thought to be a better gauge of purchase order trends;

Why Markets Care About Durable Goods Orders Report

It is  a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders.

A durable goods report showing an increase in orders is a sign that the economy is trending upwards. This can be a sign of gains in the stock market.

Durable goods orders tell investors what to expect from the manufacturing sector, a major component of the economy.

The Durable Goods Report gives more insight into the supply chain than most indicators, and can be especially useful in helping investors get a feel for earnings potential in the most represented industries: machinery, technology, manufacturing and transportation.

It provides forward-looking data such as inventory levels and new business, which count toward future earnings.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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