The Advance Durable Goods report on shipments, new orders, and inventories lifted what had been a stagnating view of US manufacturing.
New orders for manufactured durable goods in March increased $6.8 billion or 2.7 percent to $258.5 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 1.1 percent February decrease. Excluding transportation, new orders increased 0.4 percent. Excluding defense, new orders increased 2.3 percent. Transportation equipment, also up four of the last five months, led the increase, $6.1 billion or 7.0 percent to $93.8 billion.
Shipments of manufactured durable goods in March, up four of the last five months, increased $0.9 billion or 0.3 percent to $259.6 billion. This followed a 0.3 percent February increase. Transportation equipment, up following two consecutive monthly decreases, drove the increase, $1.0 billion or 1.1 percent to $90.7 billion.
Nondefense new orders for capital goods in March increased $4.9 billion or 6.5 percent to $80.5 billion. Shipments increased less than $0.1 billion or virtually unchanged to $79.0 billion. Unfilled orders increased $1.4 billion or 0.2 percent to $708.2 billion. Inventories increased $1.3 billion or 0.7 percent to $184.9 billion. Defense new orders for capital goods in March increased $1.0 billion or 7.4 percent to $13.9 billion. Shipments increased $0.1 billion or 1.0 percent to $12.6 billion. Unfilled orders increased $1.4 billion or 0.9 percent to $158.1 billion. Inventories increased $0.2 billion or 0.8 percent to $23.1 billion
New Order Drivers
- Transportation up 7.0%
- Motor vehicles and parts up 2.1%
- Nondefense aircraft up 31.2%
- Defense aircraft up 17.7%
- Shipments fell 0.1%
- New orders rose a more modest 0.4%.
- Unfilled orders were flat.
- Inventories rose 0.4%
When I saw the headline numbers I wondered how much bond yields would jump.
The answer at the moment is about +1 basis point on 5-year, 10-year, and 30-year bonds.
The yield on the 3-month note fell about 2 basis points.
Simply put, there was no discernible reaction.
Seemingly blowout transportation numbers don't look as good if you dive into the details.
Excluding transportation, the numbers look good, except inventories.
That said, this was a strong report or at least a way better than expected report.
What manufacturers think they are going to do with motor vehicles and parts is a mystery. Inventories are high and rising.
The reaction to the news is as important as the news. The bond market let out a huge yawn.
Mike "Mish" Shedlock