New orders for durable goods (ADG), fell -0.3% in April to $232,979 million. However on a three month moving average (3MMA), assessment, ADG was up 0.2% month on month (m/m) and up 1.1% year on year (y/y). Most of the decline for the month was attributable to a decline in non-defense aircraft orders which were down by 9.2%. The manufacturing sector added 6,000 jobs m/m and 98,000 y/y.

The Advance Report on Durable Goods (M3), provides statistics on manufacturers' value of shipments, new orders, end-of-month unfilled orders and total inventory. Data are collected and tabulated by six-digit NAICS (North American Industry Classification System). The M3 is based upon data reported from manufacturing establishments with $500 million or more in annual shipments. Units may be divisions of diversified large companies, large homogenous companies, or single-unit manufacturers in 89 industry categories

Figure 1 shows the history of durable goods orders from 2010 to present. There were several Q1 revisions to previously released data. January’s orders were revised downward by 0.1% to 2.3%. February’s orders were revised down from 0.7% to 0.3%. March’s orders were revised up from 1.4% to 2.3%. Data was mixed in the manufacturing sector. Primary metals slipped 0.2% m/m, but were up a sizable 7.9% y/y. Orders for automobiles were up 0.3% m/m but were off 3.8% y/y. Machinery orders fell 0.8% m/m.

A lack of clarity on policy direction is creating some uncertainty for good producers, deflating some of the enthusiasm that was omnipresent post-election. Much of the current political energy is focused on the healthcare debate and the Russian probe into the 2016 presidential election. This has taken the focus off of tax reform, infrastructure spending and regulation reform resulting in enhanced downside risk to future business investment.

At Gerdau, we routinely monitor durable goods orders since it provides a good read on the current health of the US manufacturing economy and its probable short-run future.