Boeing’s Renton factory in a 2011 aerial photograph. Photo: Jelson25, Wikimedia Commons, CC BY-SA 3.0. Image resized.
Orders for long-lasting U.S. manufactured goods rose 1.8% in September to $345.4 billion, the Census Bureau reported Tuesday, with a sharp increase in civilian aircraft orders driving much of the gain.
There was growth beyond transportation, but it was more modest. Orders excluding transportation equipment increased 0.5%, while a closely watched category of business equipment orders also rose 0.5%.
The report offers a view of demand moving through factories and their suppliers. Orders can help indicate future production, but they are not completed shipments, household purchases or a direct measure of factory employment.
Aircraft provide most of the headline lift
Total durable-goods orders increased by $6.3 billion from August. Transportation equipment accounted for $5.2 billion of that increase, rising 4.6% to $119.8 billion.
Within transportation, nondefense aircraft and parts orders jumped 28.4% to $25.3 billion. Motor vehicle and parts orders increased 0.3%.
Aircraft contracts can be large and uneven from month to month, making it important to separate the transportation swing from the rest of manufacturing. The advance report showed total durable-goods orders had increased in six of the past seven months.
August’s total was revised to a 0.1% increase and $339.1 billion in orders. Readers comparing the new report with earlier August releases should use that updated base rather than the previously reported flat or declining readings.
Business equipment orders rise, with stronger shipments
New orders for nondefense capital goods excluding aircraft increased 0.5% to $88.0 billion, following a 1.6% increase in August. The category is commonly used to track business equipment spending plans without the volatility of aircraft contracts.
Shipments in that same category rose 1.2% to $86.1 billion after a 0.6% increase in August. The distinction between orders and shipments matters: an order records demand, while a shipment reflects equipment actually moving out of a manufacturer.
Machinery orders increased 1.2%. Orders for primary metals rose 0.5%, and fabricated metal products gained 0.4%. Electrical equipment, appliances and components declined 0.3%.
Those differences show why a strong national total does not mean every factory or supplier experienced the same conditions.
Backlogs and inventories both grow
Total durable-goods shipments rose 0.9% to $336.8 billion, following a 0.2% decrease in August. Transportation equipment led that increase as well.
Unfilled orders increased 0.8% to $1.624 trillion, rising in 26 of the past 27 months. Inventories increased 0.3% to $610 billion, their twelfth consecutive monthly increase.
For businesses, backlogs describe work still to be filled and inventories describe goods and materials held at the end of the month. Neither number alone establishes whether a company is facing a shortage or excess stock.
Orders excluding defense increased 2.2%. Nondefense capital-goods orders including aircraft rose 6.2%, while defense capital-goods orders fell 1.8%.
Dollar growth is not the same as inflation-adjusted output
The Census figures are adjusted for seasonal patterns but not for price changes. A rise in the dollar value of orders can reflect changes in prices, quantities or the mix of products, so it should not be read as an equal increase in the physical amount produced.
The advance estimates are also subject to revision. The bureau notes that the survey panel is not a probability sample, meaning sampling errors and conventional confidence intervals cannot be calculated.
Census is scheduled to publish the more detailed September manufacturing report, including nondurable goods, on November 3. The next advance durable-goods report, covering October, is scheduled for November 25.
JBizNews Desk | Washington
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