Nov. 29, 2004--Durable goods orders slipped $0.9 billion or 0.4% to $196.3 billion in October, according to figures released Wednesday by the Commerce Department.
The October drop followed a 0.9% increase in durable goods orders in September.
Shipments of manufactured durable goods in October increased $1.3 billion, or 0.6%, to $200.5 billion, after a 1.1% September decrease. Unfilled orders for manufactured durable goods in October also increased $3.0 billion, or 0.6%, to $543.2 billion, the highest level since April 2001, while inventories of manufactured durable goods were up $1.5 billion or 0.5% to $279.4 billion, marking the eleventh consecutive monthly gain.
"The 0.4% drop in new orders for manufactured durable goods in October reported by the Commerce Department today is a short term correction following the unusually strong 0.9% rise in September," said John Engler, President of the National Association of Manufacturers, in a statement. "If you factor out the volatile transportation sector, new orders for durable goods actually fell by 0.7% in October, but that too reflects a normal correction after extraordinary surges of nearly 3% the two preceding months."
Engler pointed to the positive numbers on unfulfilled orders as a better indicator of future production, and noted that the three-month change in orders for fabricated metals, computers and machinery all were positive. "These industries were among the hardest hit in the recession suffering more than a third of the 2.8 million manufacturing jobs lost," he said. "A solid rebound in these sectors is critical for a stronger recovery in manufacturing employment in the months ahead, and it appears to be underway."
Engler also said that the manufacturing recovery is drawing strength from the continued fall of U.S. dollar. "Despite some of the rhetoric we see in the press, the truth is that both the U.S. and global economies need a dollar value that is in line with economic fundamentals," he said. "Markets are moving toward the necessary correction. While we are not there yet, the changes that have already taken place are allowing U.S. manufacturers to begin competing more effectively in the global economy."