The U.S. Census Bureau reported that; new orders for durable goods orders increased by 0.6% month on month, (m/m) in October, following the 1.4% decrease in September. The always-volatile nondefense aircraft orders, increasing 10.7% m/m and down 38.5% y/y influenced this trend significantly.

The Advance Report on Durable Goods (DG), provides statistics on manufacturers’ value of shipments, new orders, end-of-month unfilled orders and total inventory. Data are collected and tabulated by six-digit NAICS (North American Industry Classification System). The M3 is based upon data reported from manufacturing establishments with $500 million or more in annual shipments

Capital goods orders increased by 5.4% for the month and down 3.7% on a year on year, (y/y) basis. Transportation orders increased by 0.7% and were down 3.4% vs a year ago. Leaving out transportation business, orders remained flat m/m and were up 0.6% y/y.

Motor vehicles and parts were down 1.9% m/m as orders advanced 4.2% y/y. Concern was expressed that steel and aluminum tariffs may add risk to further growth. Orders for primary metal were up 1.4% m/m and have decreased 4.3% y/y.

Durable goods shipments remained flat 0% m/m and were higher by 1.8 % on a year on year comparison.  Capital goods shipments increased by 1.4% m/m and 0.5% y/y.

Figure 1 shows the history of DG orders from 2010 to present. New orders totaled $248.7M in October (3MMA), a 0.8% decrease y/y.

At Gerdau, we routinely monitor durable goods orders since it provides a good read on the current health of the US manufacturing economy and its probable short-run future.