Manufactured goods orders increased 0.4% in August

Andrew Cummings
September 27, 2020

USA orders for durable goods increased 0.4% in August, a slower pace than expected, restrained by declines in bookings for motor vehicles and military equipment, though a gauge of business investment rose more than forecast.

The report on durable-goods orders reflects the continued positive effects of the reversal of government shutdown policies implemented in reaction to the outbreak of Covid-19.

The so-called core capital goods orders, which exclude defense and aircraft goods and are seen as a barometer of business investment, rose 1.8 percent in August after an upwardly revised 2.5 percent gain in July. In July, those orders increased by a further 11.7%.


Traders also kept an eye on developments in Washington amid reports House Democrats plan to unveil a new $2.4 trillion coronavirus relief bill. Machinery contributed the most to the rise and increased 1.5%, or by $500 million, to $31.2 billion.

Excluding defense, orders were up 0.7% in August. Business investment tumbled at a record 26 per cent annualised rate in the second quarter, with spending on equipment collapsing at an all-time pace of 35.9 per cent. Investment in equipment has contracted for five straight quarters.

Among other categories, orders for primary metals rose 1.2 percent to $18.4 billion.


Economists polled by Reuters had forecast orders for these goods gaining 0.5% in August. But orders for fabricated metals products and electrical equipment, appliances and components fell.

United States stocks fell. The dollar was higher against a basket of currencies. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.

Orders for big-ticket items, like these laundry machines pictured at a Home Depot in Boston, were weaker in August after a big gain in July, the Commerce Department said Friday. Durable goods orders were supported by a 0.5 per cent rise in orders for transportation equipment, though demand for motor vehicles and defence aircraft eased. Orders for civilian aircraft and parts were negative, continuing to reflect ongoing cancellations. After two crashes in Indonesia and Ethiopia in March 2019, the grounding of Boeing's best-selling 737 MAX jet was also a burden on the company. In May, durable goods orders jumped 15.1 percent as the economy reopened.


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