US factory orders rose 2.7% exactly matching the Econoday Consensus.
As with the trade deficit, economists got this number correct because of the advance report. Thus, this rise will not impact GDP estimates.
Diving into the Census Bureau report on Manufacturers’ Shipments, Inventories, and Orders, we see new orders for manufactured goods in October increased $12.5 billion or 2.7 percent to $469.4 billion.
The details are not all that inspiring.
Manufacturers’ Shipments and New Orders
Details Reveal Weakness
Orders are up 2.7% but core capital goods orders, a sign of future expansion are only up 0.2%. For the year, core capital goods orders are down 4.0%.
Consumer goods, both durable and non-durable are down year-over-year. Autos fueled durable goods, and that divergence will not last forever.
Capital good shipments were down month-over-month and year-over-year except for defense. Shipments feed GDP.
2.7% growth looks strong but it was based on aircraft orders, subject to cancellation. Even if not cancelled, aircraft orders will not fill for a long time.
The factory orders report is nowhere near as good as the headline number looks at first glance.
Mike “Mish” Shedlock