CATH - Headline Durable Goods Orders Up 0.4% In September
Summary
- The latest new orders number at 0.4% month-over-month was slightly worse than the Investing.com 0.6% estimate.
- The series is up 11.3% year-over-year. If we exclude transportation, 'core' durable goods was down 0.5% MoM and up 5.1% YoY.
- In theory, the durable goods orders series should be one of the more important indicators of the economy's health.
By Jill Mislinski
The latest new orders number at 0.4% month-over-month (MoM) was slightly worse than the Investing.com 0.6% estimate. The series is up 11.3% year-over-year (YoY). If we exclude transportation, "core" durable goods was down 0.5% MoM and up 5.1% YoY.
New orders for manufactured durable goods in September, up six of the last seven months, increased $1.0 billion or 0.4 percent to $274.7 billion, the U.S. Census Bureau announced today. This followed a 0.2 percent August increase. Excluding transportation, new orders decreased 0.5 percent. Excluding defense, new orders increased 1.4 percent. Transportation equipment, up five of the last six months, drove the increase, $1.9 billion or 2.1 percent to $95.4 billion. Download full PDF
Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is down 0.7% MoM and up 7.9% YoY.
For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.
The next chart shows the year-over-year percent change in Durable Goods. We've highlighted the value at recession starts and the latest value for this metric.
The next chart shows the year-over-year percent change in Core Durable Goods (i.e., excluding transportation).
The next chart shows the growth in Core Durable Goods overlaid on the headline number since the turn of the century. This overlay helps us see the substantial volatility of the transportation component. Here is a similar overlay, this time excluding Defense as well as Transportation (an even more "core" number).
Core Capital Goods
The next two charts take a step back in the durable goods process to show Manufacturers' New Orders for Nondefense Capital Goods Excluding Aircraft, a series often referred to as Core Capex. Here is the year-over-year Core Capex.
The next chart is an overlay of Core Capital Goods on the larger series showing the percent change of the two since the turn of the century. In theory, the durable goods orders series should be one of the more important indicators of the economy's health. However, its volatility and susceptibility to major revisions suggest caution in taking the data for any particular month too seriously.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Headline Durable Goods Orders Up 0.4% In September