Factory Orders Jump A Greater Than Expected 2.8 Percent -

Factory Orders Jump A Greater Than Expected 2.8 Percent

Nov 02, 2023Jeremy ParkinsonFinance0

Factory orders from Commerce Department, chart by Mish.When I first looked at the factory order numbers this morning, some of them looked shocking. Durable goods jumped 4.6 percent and transportation orders rose 12.7 percent.The numbers were influenced by a whopping 92.5 percent jump in nondefense aircraft orders. It’s best to ignore aircraft and focus on the core items.Aircraft have very long lead times and the percentage changes swing wildly. In July, nondefense aircraft orders fell 45.7 percent. It takes nearly a 100% gain to make up for that.New Orders

New orders for manufactured durable goods in September, up following two consecutive monthly decreases, increased $13.1 billion or 4.6 percent to $297.0 billion, down from the previously published 4.7 percent increase. This followed a 0.1 percent August decrease.

Transportation equipment, also up following two consecutive monthly decreases, led the increase, $12.3 billion or 12.7 percent to $109.2 billion.

New orders for manufactured nondurable goods increased $3.0 billion or 1.0 percent to $304.5 billion.

Shipments

Shipments of manufactured durable goods in September, down two of the last three months, decreased $0.9 billion or 0.3 percent to $283.6 billion, unchanged from the previously published decrease.

This followed a 0.5 percent August increase. Transportation equipment, down three of the last four months, drove the decrease, $1.1 billion or 1.2 percent to $91.3 billion.

Shipments of manufactured nondurable goods, up four consecutive months, increased $3.0 billion or 1.0 percent to $304.5 billion. This followed a 2.2 percent August increase. Petroleum and coal products, also up four consecutive months, led the increase, $2.2 billion or 3.1 percent to $73.6 billion.

Reflections on Factory OrdersIt’s shipments that drive GDP, but orders lead shipments.The one percent drop in motor vehicles and parts has a pair of possible explanations: The UAW strike that’s now over and falling consumer demand for EVs despite the massive push and subsidies by the Biden administration.ISM Manufacturing Plunges to 46.7 Percent. New Orders, Backlogs in ContractionYesterday, I commented ISM Manufacturing Plunges to 46.7 Percent. New Orders, Backlogs in Contraction

Economists expected the ISM^® manufacturing PMI^® to hold steady at 49.0. Instead, the PMI went into significant contraction with a steep drop in employment.

Arguably, the most telling statistic is that eighty-nine percent of panelists’ companies reported ‘same’ or ‘lower’ prices in October.

Overall weakness in prices can be attributed to falling demand, not strikes, And it’s despite artificial demand spurred by the Inflation Reduction Act.

Falling prices will be welcomed by the Fed.

Wake Up Mr. President, Consumers Don’t Want EVs
Despite subsidies, EVs are piling up on dealer lots. Prius hybrids have a 1-week supply. The Mustang Mach-E SUV has a 3 1/2 month supply.For discussion, please see Wake Up Mr. President, Consumers Want Hybrids, Not EVs.Soft vs Hard DataISM is soft data while the factory orders report is hard numbers.Those hard numbers, with a spotlight on core items and shipments, is not as strong as some of the headline numbers appeared at first glance.More By This Author:A Hawkish Interest Rate Hold By The Fed Or Something Else? Fed Holds Rates Steady, Issues Say Nothing Boilerplate StatementISM Manufacturing Plunges to 46.7 Percent. New Orders, Backlogs In Contraction