Orders for durable goods plunged in September, while shipments declined less, according to figures released Friday by the U.S. Commerce Department.
Orders decreased 5.9% following a 0.6% August decrease. The September figure is the largest drop since November 2001. Year to date, new orders are 0.6% below the same period a year ago.
Shipments fell 1.1% following a 1.6% August decrease. Year to date,
shipments are 1.4% below the same period a year ago.
Newport Communications Senior Economist Jim Haughey said the September
figures are almost entirely due to steep declines in aircraft, truck and
communications equipment orders and a small drop in auto orders. He predicts this weeks' report for non-durable goods should be better, although he noted a small decline is possible.
"The recovery in durable manufacturing remains stalled," said Haughey. "Short-term, autos, communications equipment and household durables will return to a modest growth trend. Communications equipment orders fell to about half of the total for both current shipments and orders in recent months. A matching rebound is likely this fall even in this depressed industry. Auto discounts have returned after a
partial cancellation in September. The ongoing housing, remodeling and the mortgage refinancing boom will spur sales of household durables. But there are several longer-term restraints on the industry. The rush to outsource electronics production to Asia has probably not peaked but will be subsiding by spring as the dollar depreciates. Capital equipment exports to Europe are lagging because of the sluggish economic recovery, especially in Germany. The consensus forecast is for
the trend to reverse around year end."
Haughey noted durable orders and shipments rose in the third quarter as the large surge in July more than offset the smaller falloffs in August and September. He said the trend continues to be slowly up, but expect month-to-month data to remain volatile. Aircraft and truck orders have recently been well below trend and now will rebound in the fall, he says. Already manufacturers have reported an October pickup in heavy truck orders.
Also on Friday, two other readings on the U.S. economy were mixed. Figures
showed sales of both new and existing homes were up and continued their healthy pace, while the University of Michigan's consumer sentiment index posted its worst showing in nine years.