The Census Bureau reported that new orders for durable goods fell 0.1 percent in August, reversing the 4.1 percent gain last month (All rates of growth are in annual terms). These figures have been highly volatile over the past couple years, up one month and then down the next. Despite this month’s decrease, durable goods new orders are 10.1 percent higher in 2011 than at the same time in 2010.
As the monthly numbers suggest, the sector-specific figures were mixed. The strongest gains for new orders came from the nondefense aircraft and parts (up 23.5 percent), defense aircraft and parts (up 22.5 percent), communications equipment (up 7.8 percent), computers and related products (up 5.5 percent) and nondefense capital goods (up 5.2 percent). These were offset by declines in motor vehicle and parts (down 8.5 percent), defense capital goods (down 5.7 percent), primary metals (down 0.8 percent) and fabricated metal products (down 0.7 percent).
Manufacturers’ shipments were down by 0.2 percent in August, retreating from three consecutive months of increases. These losses were led by the motor vehicle sector, but offset by gains in the shipments of aircraft and machinery. Unfilled orders and inventories both rose by 0.9 percent for the month.
Overall, these figures provide both good and bad news. While the headline number was down, which is quite discouraging, there was definite strength in the aircraft, computers and capital goods sectors. This is a good sign on the health of those sectors. Machinery did well, too, particularly in terms of shipments for the month. While metals and motor vehicles experienced decreases in new orders and shipments for the month, the larger picture is a positive one for them, as their year-to-date gains are impressive and a sign of a larger rebound, particularly for automobiles.
Of course, recent manufacturing survey data suggest continued weaknesses in terms of production and new orders. For the entire industry to experience a rebound moving forward, many of the sentiment surveys out there will need to reverse course. With that said, durable goods industries have been more resilient than others.
Chad Moutray is chief economist, National Association of Manufacturers.