Advanced Durable Goods Orders: The U.S. Census Bureau reported that new orders for durable goods orders increased by 11.2% month on month (m/m) in July, following the 7.7% increase in June. The always-volatile nondefense aircraft orders, down 467.6% y/y, influenced this trend significantly.

The Advance Report on Durable Goods (DG), 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.

Capital goods orders increased by 13.6% for the month and down 14.3% on a year on year (y/y) basis. Transportation orders increased by 35.6% and were down 29.0% vs a year ago. Leaving out transportation business, orders increased 2.4% m/m and decreased 3.3% y/y.

Motor vehicles and parts were up 21.9% m/m as orders decrease 21.5% y/y. Concern was expressed that steel and aluminum tariffs may add risk to further growth. Orders for primary metal were up 0.2% m/m and have decreased 10.6% y/y.

Durable goods shipments increased 7.3% m/m and were lower by 9.4% on a year on year comparison. Capital goods shipments increased by 1.8% m/m and down 7.1% y/y.

Figure 1 shows the history of DG orders from 2010 to present. New orders totaled $230.6M in July (3MMA), a 12.1% decrease y/y.

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.