Durable Goods Orders Contract for Seventh Month

Real durable goods new orders in August 2015 were $229,471 million. Compared with one year ago, durable goods new orders were down 3.5 percent. August was the seventh month in a row that the month-over-month rate of change contracted. The annual rate of change contracted for the second month in a row at an accelerating rate. While motor vehicle and parts orders were up 9.1 percent compared with one year ago, aerospace orders were down 19.4 percent. The annual rate of change for motor vehicle and parts orders is growing faster and faster while aerospace orders are contracting (mostly because of a huge amount of orders in July 2014).

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 accelerating. 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.