Durable Goods Orders Fall 4.7 Percent in September

Real durable goods new orders in September 2015 were $246,098 million. Compared with one year ago, durable goods new orders were down 4.7 percent. September was the eighth month in a row that the month-over-month rate of change contracted. The annual rate of change, now -4.2 percent, contracted for the third month in a row at an accelerating rate. 

Motor vehicle and parts orders increased a robust 11.0 percent. That was the second fastest rate of growth since March. The annual rate of change generally has grown at an accelerating rate since November 2014. The annual rate of growth is now 6.8 percent. However, aerospace orders are moving in the opposite direction. In September, aerospace orders were down 12.9 percent. Compared with one year ago, they have contracted in five of the last six months. The annual rate of change has contracted three months in a row. The rate of contraction is fairly significant because of the spike in orders in July 2014, which is presenting an extremely negative comparison at the moment.

Generally, a good leading indicator for real capital goods new orders is real consumer spending, although that correlation doesn't seem to be working at the moment. Month-over-month, consumer spending has been growing at a steady rate, near its historical average since August 2014. Annually, the rate of growth has been relatively flat as well. This should indicate accelerating growth in durable goods new orders. But, these two series have diverged, which makes me wonder if all of the new seasonal adjustments applied to GDP and consumer spending are affecting the historic relationship between consumer spending and durable goods new orders or is the huge month of aerospace orders in July 2014 throwing annual comparisons off right now.

We use real capital goods new orders to forecast activity in metalcutting job shops, metalworking, and durable goods.