Oct. Durable Goods: New Orders Down 0.5%, Shipments Up 1.5%, Inventory Up 0.6%

RJS at MarketWatch 666, October Durable Goods: New Orders Down 0.5%, Shipments Up 1.5%, Inventories Up 0.6%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for October (pdf) from the Census Bureau reported that the value of the widely followed new orders for manufactured durable goods decreased by $1.2 billion or 0.5 percent to $260.1 billion in October, after September’s new orders were revised but still indicate a 0.4% decrease to $261.3 billion reported last month to $237.8 billion, same as previously reported . . . however, year to date new orders are still 22.1% above those of 2020, albeit down from the 23.4% year to date increase we saw in this report last month.

As in September, the volatile monthly change in new orders for transportation equipment was responsible for October’s new orders decrease, as new transportation equipment orders fell $2.0 billion or 2.6 percent to $75.3 billion, on 14.4% decrease to $8,848 million in new orders for commercial aircraft and a 21.8% decrease to $4,725 million in new orders for defense aircraft . . . excluding orders for transportation equipment, other new orders rose 0.5%, while excluding just new orders for defense equipment, new orders increased 0.8% . . . meanwhile, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, rose by $515 million or 0.6% to $70,025 million, after rising an upwardly revised 1.3% in September.

At the same time, the seasonally adjusted value of October’s shipments of durable goods, which will be included as inputs into various components of 4th quarter GDP after adjusting for any changes in prices, increased by $4.0 billion or 1.5 percent to $261.5 billion, the fifth increase in six months, after September shipments were revised from $257.0 billion to $257.5 billion, now up 0.6% from August, revised from the 0.4% increase reported last month . . . a $2.3 billion or 3.2 percent increase to $75.3 billion in shipments of transportation equipment, which rose for the first time in three months, led the October increase with a 4.3% increase in shipments of motor vehicles and parts, but shipments other than those of transportation equipment were also up 0.9% for the month . . . of those, shipments of nondefense capital goods less aircraft rose 0.3% to $76,034 million, their eighth consecutive monthly increase, after September capital goods shipments were revised from $75,893 million to $75,805, now a 1.3% increase from August.

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 9th month in a row, increasing by $2.8 billion or 0.6 percent to $466.0 billion, after September’s inventories were revised from $462.7 billion to $462.2 billion, now 1.0% higher than the prior month . . . an increase in inventories of fabricated metal products, up thirteen consecutive months, led the October inventory increase, as they rose $0.9 billion or 1.4 percent to $61.0 billion, while the value of inventories of transportation equipment fell 0.2% to $154.1 billion…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the 9th consecutive month, increasing by $3.1 billion or 0.2 percent to $1,249.7 billion, after September’s unfilled orders were revised from $1,247.1 billion to $1,246.6 billion, still a 0.7% increase from August . . . a $1.4 billion or 1.2 percent increase to $113.7 billion in unfilled orders for machinery led the October increase, while unfilled orders of transportation equipment were statistically unchanged at $824.1 billion . . . compared to a year earlier, the unfilled order book for durable goods is 5.5% above the level of last October, with unfilled orders for transportation equipment 1.1% above their year ago level, with larger increases in other  transportation equipment categories partly offset by a 4.1% decrease in the backlog of new orders for military aircraft.