Orders for durable goods rose 3% in March, but it was mostly for ships and tanks, with non-transportation orders off 1.8% -- the fourth consecutive decline. However, shipments rose 0.1% after declining the previous five months. The stable shipments value is the best news for freight.
Because durable goods prices are almost certainly declining while the economy is stalled, the volume of shipments actually rose more than 0.1%.
Similarly, the volume decline in non-transportation orders is less than the dollar decline, because the biggest decline (5.3%) was for electronics, where prices are falling steeply to clear out surplus inventory. Some of the orders decline is also likely buyers waiting longer to order when delivery lead-times are shortening.
Overall, the durable goods report is on track with Heavy Duty Trucking's outlook for very small shipments growth over the second quarter, then a return to average growth by the end of the year.
When shipments rebound, the impact will be in the same regions hit with big drops in freight volume in recent months. Durable goods manufacturing accounts for 7.3% of personal income in the United States but is much higher in a few regions. Durable manufacturing provides 17% of all income in Michigan, 15% in Indiana, 12% in Ohio, 11% in Oregon and Wisconsin, 10% in Idaho and 9% in California, Connecticut, Minnesota and Tennessee.