Economy
October 27, 2013
Durable Goods Orders Up by 6.1%
Written by Peter Wright
New orders for manufactured durable goods in September came in slightly above trend at $233.411 billion, (Fig 1). This monthly data is very spiky mainly due to erratic orders for civil aircraft. However it is one of the earliest indicators for US manufactured goods and though we are not involved in aviation the overall trend line is very relevant to the steel business.
The trend of durable goods orders is a useful reality check for other manufacturing data such as the ISM index, the industrial production index and employment. Even though the monthly durable goods trend is up the three month moving average has declined for the last two months because the months of July and August were well below trend. Year over year orders for Durable goods are up by 6.1 percent, (Fig 2), we believe this is the most relevant number for our businesses and it is included in the “Key Indicators” spread sheet that we publish monthly.
Moody’s Economy.com published the following conclusion on Friday: Government dysfunction is holding back businesses from investing. Uncertainty leading up to the October shutdown weighed on business and consumer sentiment. Fundamentals still favor additional investment: Firms are highly profitable, financing is accessible and affordable for creditworthy businesses, and labor cost pressures remain extremely low. After the rough patch running through the end of the year, investment will improve.
