The September durable goods orders and shipments data show a manufacturing sector that was poised for growth prior to the most recent financial crisis, but probably should be discounted in light of more recent events.
September durable goods orders posted a surprise 0.8% rise in their fourth gain in five months, rebounding from a 5.5% decline in August.
Ex-transportation orders printed a weaker 1.1% drop, down for a second month, and ex-military posted a 0.6% decline. Boeing Corp. reported 41 new orders after 38 in August, so it was no surprise that nonmilitary aircraft was up 29.7% after falling 37.7%.
But autos and parts orders were up 3.0%, with the advance probably related to the new model year. This added to the plus-6.3% reading for transportation.
Machinery posted up 0.5% and electrical equipment increased 1.5%.
The September orders weakness was in primary metals at a 4.5% decline — perhaps an indication of an overall softening to come as metals are inputs to many other manufactured items — and in communications equipment at a 14.6% drop.
Shipments were up 0.2% and inventories rose 0.4%, suggesting growth in gross domestic product inventories. Nonmilitary capital goods shipments were up 1.5% in September, down 3.3% in August, and up 1.2% in July. The third-quarter average stands a little below the June level, showing weak business investment.
Overall, this is a stronger-than-expected report that shows the economy doing better prior to the financial meltdown. But it is questionable if the improvement held as households and businesses were cut off from credit.
— Market News International
