Factory orders jump 2.8% more than expected – MishTalk

Bloomberg Econoday forecasts indicated a 1.6% increase in factory orders. The actual increase was 2.8 percent. The jump is fueled by a huge increase in aircraft orders.

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 jumped 12.7 percent.

These numbers were affected by the huge jump of 92.5 percent in orders for non-defense aircraft. It’s best to ignore planes and focus on the essentials.

Airplanes have a very long lead time and the percentage changes fluctuate greatly. In July, non-defense aircraft orders fell by 45.7 percent. It takes almost 100% to make up for it.

new applications

• New orders for manufactured durable goods in September, after two straight monthly declines, rose $13.1 billion, or 4.6 percent, to $297.0 billion, down from the previously published increase of 4.7 percent. This followed a 0.1% decline in August.
• Transportation equipment, which also rose after two straight monthly declines, led the increase of $12.3 billion, or 12.7 percent, to $109.2 billion.
• New orders for nondurable manufactured goods rose $3.0 billion, or 1.0%, to $304.5 billion.

Shipments

• Shipments of manufactured durable goods in September, down two of the previous three months, fell by $0.9 billion, or 0.3 percent, to $283.6 billion, unchanged from the previously published decline..
• This followed a 0.5 percent increase in August. Transportation equipment, which declined three of the past four months, led the decline by $1.1 billion, or 1.2 percent, to $91.3 billion.
• Shipments of nondurable manufactured goods rose, for four consecutive months, by $3.0 billion, or 1.0 percent, to $304.5 billion. This followed a 2.2 percent increase in August. Petroleum products and coal, which also rose for four straight months, led the increase by $2.2 billion, or 3.1 percent, to $73.6 billion.

Reflections on factory orders

Shipments drive GDP, but orders drive shipments.

The 1% drop in cars and parts has two possible explanations: the now-ended UAW strike and lower consumer demand for electric vehicles despite a massive push and subsidies by the Biden administration.

The ISM manufacturing index fell to 46.7%. New orders, backlogs shrinking

Yesterday, ISM suspended manufacturing falls to 46.7 percent. New orders, backlogs shrinking

Economists expect the ISM to be released^® BMI manufacturing^® To stabilize at 49.0. Instead, the PMI entered a major contraction with a sharp decline in employment.

Arguably the most telling statistic is this Eighty-nine percent of panelist companies reported “same” or “lower” prices in October.

The general weakness in prices can be attributed to falling demand, not to strikes, despite the artificial demand stimulated by the de-inflation law.

Lower rates will be welcomed by the Fed.

Wake up Mr. President, consumers don’t want electric cars

Despite the subsidies, electric cars are piling up in lots of stores. Prius hybrids have a one-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 electric cars.

Soft data versus hard data

The ISM is soft data while the Factory Orders report is flat numbers.

These hard numbers, with highlights and shipments, are not as strong as some of the headline numbers appear at first glance.