Transportation weighs on September Durable Goods Orders

Summary

Weakness in transportation orders was largely behind the 0.4% decline in durable goods orders for September. Excluding transportation, orders advanced for the seventh consecutive month. Although core capital goods shipments posted a solid gain, unfilled orders continue to march higher as businesses are unable to get their hands on enough supply to meet demand.

Blame transportation

Durable goods orders slipped 0.4% in September but declines can largely be traced to the volatile transportation sector. Excluding transportation, orders advanced for the seventh consecutive month, rising 0.4%. While the trend in core orders has been rather resilient, the data for September continue to demonstrate a manufacturing sector strapped by a lack of supply.

The weakness in transportation orders was largely expected. The the27.9 % decline in aircraft orders is consistent with orders data from Boeing, which revealed just 27 new orders during the month, around half of what is traditionally seen during September, and down from 53 new orders in August. Motor vehicle orders slipped (-2.9%), its second consecutive monthly decline, amid a severely strapped supply of necessary inputs. Supply problems continue to inhibit production in the sector, as the output of autos slumped by the most since April last month.

Outside transportation, the details of the orders were pretty mixed. Orders for machinery and metals increased, but computers and electrical equipment orders decreased. Overall, the continued gaining core capital goods orders in September is encouraging and points to ongoing strength in capital investment.

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