Key takeaways:
- Orders decrease by 0.4%, the same percentage as shipments increase
- Since January, orders have exceeded shipments by 1.2%, reflecting continued – though more modest – supply-chain issues
- Transportation equipment is the only one of six major categories where shipments have not increased
By Manuel Gutierrez, Consulting Economist to NKBA
U.S. manufacturers of durable goods received fewer orders in September than in the previous month, but the difference was negligible. Durable goods orders in September fell by 0.4% to $261 billion. Over the last five months, new orders have fluctuated over a very narrow range. Although they hit a high of $262 billion in August, orders have ranged between $257 and $262 billion since May of this year.
Despite the often-mentioned supply chain issues, manufacturers of durable goods were able to ship more in September than the previous month. Shipments, similar to orders, also registered minimal changes, rising by a scant 0.4% to $257 billion, a shade lower than the all-time high of $257.3 billion shipped in July of this year.
Autos and other vehicles continue to face shipment challenges.
Generally, shipments have not kept up with orders since the beginning of the year. Cumulatively since January, orders have exceeded shipments by 1.2%- not a significantly high figure but one that reflects the inability of manufacturers to ship some of their orders.
Figure 2 displays the two-year trend in new orders and shipments for the six durable good categories which are provided by the Department of Commerce.
It can clearly be seen that orders for all categories exceeded shipments at least since the beginning of last year. This suggests that the manufacturing sector should expect to continue expanding over the next few months.
Note that the chart for Computers in Figure 2 shows a huge gap between orders and shipments. This is because the Department of Commerce does not collect orders data for several sub-categories within Computers. The three groups are: Storage Devices, Peripheral Equipment, and Audio and Video Equipment. It is not clear why that gap exists other than it being the practice of companies that report such data to the Department of Commerce.
The overall 0.4% increase in September shipments was carried among virtually all products. The only exception is Transportation Equipment, the largest category, accounting for 28% of durable shipments. It includes autos, airplanes, and other types of vehicles. Shipments of Transportation Equipment fell 1% in September, to $72.5 billion. Among the other five categories where more product was shipped in September, Total Machinery leads with a 1.7% increase to $37.3 billion. Incidentally, this is the second largest durable goods category.
Lowest gains were in shipments of Primary Metals, up only 0.3% to $24 billion.
On the orders side, the picture is different. Overall, as indicated above, orders were (0.4%) lower in September. Three of the six categories posted declines in new orders.
The biggest decline was in Transportation Equipment, down 2.3% to $77.7 billion.
The other two categories posting declines were Electronic Equipment & Appliances (down by 0.5% to $13 billion), and Computers & Electronics (down 0.3% to $25.2 billion).
Charts:
