Nominal orders for durable goods showed strong, broad gains in…

New durable goods orders rose 1.0% in October after rising 0.3% in September. Total orders for durable goods rose by 11.5% compared to last year. The October increase shows total durable goods orders of $277.4 billion, the second highest on record (see top of chart one).

New orders for non-defense capital goods excluding aircraft, or core capital goods, a measure of investment in business equipment, rose 0.7% in October after declining 0.8% in September. Orders rose 7.9% year-over-year to $75.3 billion.

However, rising prices affected orders for capital goods. In real terms, after adjusting for inflation, real new orders for durable goods rose 0.8% in October after rising 0.1% in September. Real new orders for non-defense capital goods, one of AIER’s leading indicators, rose 1.2 percent after jumping 3.4 percent in September (see bottom of chart one). Real new orders for capital goods rose 7.5% year-over-year but remain below their January 2022 levels.

All but one of the seven major categories shown in the Durable Goods report posted growth in nominal terms in October. Transportation equipment jumped 2.1 percent, the third straight increase (see second chart). In the transportation equipment category, non-military aircraft rose 7.4% after rising 23.4% in September, military aircraft jumped 21.7% after falling 32.6%, and vehicles and parts rose 0.6% after rising by 2.4% in September.

Among other selected categories, orders for machinery increased by 1.5%, for electrical and home appliances, computers and electronic goods – by 0.4%, for all other categories of durable goods – by 0.2%, and orders for finished goods metal products – by 0.1%. The order category for primary metals showed the only decline, falling 0.1%. Durable goods orders showed a strong recovery from the recession due to the nominal dollar lockdown. However, after adjusting for rising prices, real orders for durable goods have risen at a more modest pace in recent months.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 after over 25 years of economic and financial market research on Wall Street. Bob previously led the Global Equity Strategy division of Brown Brothers Harriman, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.

Prior to joining BBH, Bob was Senior Equity Strategist at State Street Global Markets, Senior Economic Strategist at Prudential Equity Group, and Senior Economist and Financial Markets Analyst at Citicorp Investment Services. Bob holds an MA in Economics from Fordham University and a BA in Business from Lehigh University.

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