Skip to content

Mixed Signals from Today’s Durable Goods Report

Today’s report from the Department of Commerce on new orders and shipments of durable goods sent mixed signals on the state of the economy and outlook for third quarter GDP. Total new orders for durable goods fell 0.1 percent in September following a 0.3 percent gain in August. Shipments of durable goods however, rose 0.8 percent after two months of no gains. In aggregate, new orders tend to lead shipments by a couple months.

Two key measures within the report are the new orders and shipments of nondefense capital goods excluding aircraft.  This category is a good indicator of business investment in capital equipment, a component of GDP. For this measure, signals are also mixed.  New orders for nondefense capital goods excluding aircraft fell 1.2 percent for the month while shipments rose 0.3 percent. For the third quarter as a whole, new orders for nondefense capital goods excluding aircraft rose at a 5.2 percent annualized rate while shipments fell at a 4.4 percent pace.

So what’s the take away? The data suggest that the business investment part of the upcoming report on third quarter GDP may continue to be weak but the turn-around in new orders in the third quarter could be a positive sign for business investment in the fourth quarter (see chart 1).

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: