Economy
Cars, Planes, Machinery Lead Plunge in New Factory Orders
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The U.S. Census Bureau reported Tuesday morning that new factory orders fell by 0.8% month over month in April on a seasonally adjusted (SA) basis. The decline is the second in three months and follows an increase of 1.3% in March new orders. Bloomberg’s Econoday consensus estimate called for a drop of 0.8%.
Particularly hard hit were new orders for non-defense aircraft and parts, down 25.2% month over month. On a non-seasonally adjusted (NSA) basis, new orders are down 26.6%. Shipments of non-defense aircraft were down a SA 16.1% month over month and down a NSA 1.4% year over year for the first four months of 2019.
The drop in aircraft and parts shipments is almost entirely due to the grounding of Boeing’s 737 MAX following to crashes five months apart that killed 346 people. The 737 MAX was grounded in mid-March and Boeing has not shipped a new 737 MAX since the grounding took effect. Orders for the plane have similarly dried up. Fortunately for Boeing, its order book is stuffed for several years, so the value of unfilled orders dipped only slightly in April.
Auto shipments fell 6.4% SA month over month and are down 6.2% NSA compared with April 2018. New orders fell 1.7% SA but are up 6.4% NSA year over year. As we’ve often noted, U.S. automakers are selling fewer vehicles but each one is more expensive than it was last year. How long that situation can last may be answered very soon.
Excluding new orders for transportation industries, April’s new orders rose 0.3% SA month over month and are up 1.4% NSA compared with the first four months of last year.
New orders for construction equipment, another important export category, fell by 6.9% SA in April and are down 1% NSA year over year. Overall orders for new machinery rose by 0.3% SA month over month, including a 12% jump in mining and oil and gas field machinery, and are now 1.3% NSA higher than a year ago.
New orders of durable goods fell by 2.1%, following a rise of 1.7% in March and a drop of 2.6% in February. For the year to date, orders for new durable goods are up 2.1% NSA.
Orders for nondurable goods rose by 0.5% SA in April following increases of 0.9% in March and 0.7% in February. On a year-over-year NSA basis, new orders are up 1.1% compared with April 2018.
Overall manufacturing shipments totaled $504.1 billion in April, up 2.6% NSA year over year. New orders totaled $499.3 billion and are up 1.6% NSA year over year for the first four months of 2019.
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