The U.S. Census Bureau reported that; new orders for durable goods orders increased by 2.4% month on month, (m/m) in December, following the 3.1% decrease in November. The always-volatile nondefense aircraft orders, decreasing 74.7% m/m and down 41.6% 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 5.9% for the month and down 5.2% on a year on year, (y/y) basis. Transportation orders increased by 7.6% and were down 4.9% vs a year ago. Leaving out transportation business, orders remained flat m/m and were up 0.3% y/y.
Motor vehicles and parts were down 0.9% m/m as orders advanced 2.7% y/y. Concern was expressed that steel and aluminum tariffs may add risk to further growth. Orders for primary metal were up 0.6% m/m and have decreased 4.9% y/y.
Durable goods shipments increased 2.4% m/m and were lower by 1.5% on a year on year comparison. Capital goods shipments increased by 0.1% m/m and down 0.6% y/y.
Figure 1 shows the history of DG orders from 2010 to present. New orders totaled $245.4M in December (3MMA), a 1.5% 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.