Durable Goods New Orders Growth Rate Improves In September 2018

The headlines say the durable goods new orders improved. Our analysis shows the rolling averages improved.

Analyst Opinion of the Durable Goods Situation

Defense aircraft was the main tailwinds this month in the adjusted data. This series has wide swings monthly so our primary metric is the unadjusted three-month rolling average – which improved and is still growing faster than GDP.

Econintersect Analysis:

unadjusted new orders growth decelerated 6.9 % (after accelerating 2.9 % the previous month) month-over-month, and is up 6.5 % year-over-year.

the three month rolling average for unadjusted new orders accelerated 1.6 % month-over-month, and up 10.1 % year-over-year.

Year-over-Year Change of 3 Month Rolling Average – Unadjusted (blue line) and Inflation Adjusted (red line)

Inflation-adjusted but otherwise unadjusted new orders are up 4.3 % year-over-year.

Backlog (unfilled orders) accelerated 0.1 % month-over-month, and is up 5.0 % year-over-year.

The Federal Reserve’s Durable Goods Industrial Production Index (seasonally adjusted) growth up 0.6 % month-over-month, up 4.1 % year-over-year [note that this is a series with moderate backward revision – and it uses production as a pulse point (not new orders or shipments)] – three-month trend is decelerating.

Comparing Seasonally Adjusted Durable Goods Shipments (blue line) to Industrial Production Durable Goods (red line)

note this is labeled as an advance report – however, backward revisions historically are relatively slight.

Census Headlines:

new orders up 0.8 % month-over-month.

backlog (unfilled orders) up 0.8 % month-over-month.

the market expected (from Econoday):

Durable Goods sector is the portion of the economy which provides products which have a utility over long periods of time before needing repurchase – like cars, refrigerators, and planes.

Econintersect concentrates on new orders as it is the entry point for future production – and somewhat intuitive economically.