Headline Durable Goods Orders Up 0.5% In March

The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:

New orders for manufactured durable goods in February decreased $2.9 billion or 1.1 percent to $254.0 billion, the U.S. Census Bureau announced today. This decrease, down following nine consecutive monthly increases, followed a 3.5 percent January increase. Excluding transportation, new orders decreased 0.9 percent. Excluding defense, new orders decreased 0.7 percent. Transportation, down following five consecutive monthly increases, led the decrease, $1.3 billion or 1.6 percent to $83.6 billion. Download full PDF

The latest new orders number at 0.5% month-over-month (MoM) was worse than the Investing.com 2.5% estimate. The series is up 25% year-over-year (YoY). If we exclude transportation, "core" durable goods was up 1.6% MoM, which was at the Investing.com consensus of 1.6%. The core measure is up 12.8% YoY.

Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is up 0.9% MoM and up 11.6% YoY.

For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

Durable Goods Components

The next chart shows the year-over-year percent change in Durable Goods. We've highlighted the value at recession starts and the latest value for this metric.

Core Durable Goods

The next chart shows the year-over-year percent change in Core Durable Goods (i.e., excluding transportation).

Core Durable Goods

The next chart shows the growth in Core Durable Goods overlaid on the headline number since the turn of the century. This overlay helps us see the substantial volatility of the transportation component.

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