Christopher Furlong, Getty Images
Commercial aircraft orders dropped 357 in September

US Durable Goods Orders Fall Again in September

Oct. 27, 2015
Up, down, up, down: The latest durable goods report marked another drop, though not at steep as August's, after consecutive monthly increases. Are we headed back up in the fourth quarter and beyond?

The U.S. Census Bureau reported another drop for U.S. durable goods orders on Tuesday, down 1.2% to a seasonally-adjusted $231.1 billion. The decline, the second straight month with a dip, was in line with forecasts and followed a revised 3.0% drop in August and a 1.9% increase in July.

According to the report, new orders for transportation dropped by 2.9% and commercial aircraft plummeted 35.7%, while orders for defense capital goods and motor vehicles picked up some of the slack thanks to respective monthly increases of 12.3% and 1.8%.

Year-over-year, though, new durable goods orders are still down 4.6%.

“The industry detail shows a weak picture for orders of long-lived items,” MAPI Foundation chief economist Daniel J. Meckstroth said, noting  that the commercial aircraft drop is a sign of weakness in emerging markets in this export-oriented industry. “The category of nondefense capital goods excluding aircraft takes out the very long lead time industries of defense and aerospace and concentrates only on near-term capital equipment orders. September’s report showed a small decline.”

This latest data highlights the weaknesses in the manufacturing sector — which has slumped for much of the year — with exports hit by faltering foreign demand as the global economy slows. Manufacturing has lagged behind most other sectors as the economy musters moderate overall growth.

“The durable goods report for September is consistent with slow growth in manufacturing output in the third quarter,” Meckstroth said. “Metals and electronic component prices are falling because of oversupply and the appreciation of the dollar causes import prices to fall — thus the U.S. is importing deflation.

“Slowing growth in the emerging economies hurts export-oriented capital goods, particularly aerospace, construction, mining, and agricultural types of equipment. Thankfully, U.S. domestic demand is a solid base of moderate growth that counteracts some of the international weakness of late.“

Meckstroth said the MAPI Foundation predicts a lackluster fourth quarter, with the industrial sector posting modest growth in physical volume for the year and manufacturing industrial production growing 1.9%. There does, though, seem to be a proverbial light at the end of the annual tunnel.

“The depressing factors this year, including the rising value of the dollar, falling energy prices, and collapsing commodity prices, will not repeat in 2016,” Meckstroth said. “Manufacturing production growth should accelerate next year.”

About the Author

Matt LaWell | Staff Writer

Staff writer Matt LaWell explores news in manufacturing technology, covering the trends and developments in automation, robotics, digital tools and emerging technologies. He also reports on the best practices of the most successful high tech companies, including computer, electronics, and industrial machinery and equipment manufacturers.

Matt joined IndustryWeek in 2015 after six years at newspapers and magazines in West Virginia, North Carolina and Ohio, a season on the road with his wife writing about America and minor league baseball, and three years running a small business. He received his bachelor's degree in magazine journalism from Ohio University.

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