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First Cut: Durable goods orders eke out a rise in August with little support from transportation

New orders for durable goods eked out a 0.2% rise in August from July after an unrevised up 2.0% in the prior month. New transportation orders were down 0.4% in August after a substantial 7.2% increase in the prior month. Excluding transportation, orders were up 0.5%, reversing the down 0.5% in July.

Most of the strength in new orders came from primary metals (up 1.3%) and fabricated metal products (up 1.3%), and for machinery (up 0.6%). Among transportation orders, motor vehicles were down 0.8% and nondefense aircraft and parts were off 17.1%. A gain of 30.3% for defense aircraft was insufficient to offset other declines.

“Core” new orders in August — durables orders less civilian aircraft capital goods and defense capital goods — were up a bare 0.1% on the heels of a small 0.1% decline in July.

Unfilled orders edged up 0.1%, shipments also were up 0.1%, and inventories rose 0.3%. With low levels of new orders, the backlog is likely to diminish, especially with the dearth of orders for new aircraft. Shipments will not do more than move orders out quickly. The rise in inventories may be a reflection of a last minute effort to get some inputs for production on hand before another round of tariffs pushes costs up and imposes challenges along the supply chain.

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