You had to look very hard to find any good news in the latest durables report. Manufacturing has lost significant momentum with nondefense aircraft leading the way down. New factory orders for durables plunged a whopping 13.2 percent (monthly) in August after a revised 3.3 percent boost in July (originally up 4.2 percent and revised to 4.1 percent in that July factory orders report). Excluding transportation, orders dipped 1.6 percent, following a 1.3 percent decline in July.
The transportation component fell 34.9 percent after a 13.1 percent gain in July. Leading the way down, civilian aircraft orders dropped a monthly 101.8 percent. Yes, that is more than 100 percent, meaning Boeing lost orders net for the month, compared to the prior month. Motor vehicles also contributed to the drop in transportation orders, falling 10.9 percent after a 12.1 percent advance the prior month. Rounding out the transportation subcomponents, defense aircraft orders declined 8.1 percent in August.
Weakness was broad based outside of transportation with declines seen in all major industries except one. Electrical equipment rebounded in August.
Overall investment related numbers were pulled down by aircraft, but excluding aircraft rose slightly. Nondefense capital goods orders dropped 24.3 percent, following a 4.8 percent gain in July. Nondefense capital goods orders excluding aircraft edged up 1.1 percent in August, following a decrease of 5.2 percent the prior month. Shipments for this series slipped 1.7 percent, following a 1.1 percent decline in July.
The bottom line is that there is further evidence of significant slowing in manufacturing in August. However, a few regional Fed manufacturing surveys have been a little more positive in September. Perhaps August was the bottom in the slowing in manufacturing but there are cross currents from slower growth in Asia and recession in much of Europe versus modest demand growth in the U.S.