New orders for manufactured durable goods rose slightly in April, with orders of transportation and technology equipment leading the rise after three consecutive months of increases.
Total new orders for durable goods were up 0.7% or $1.9 billion to $248.1 billion in April from $282.2 billion in March, according to the Monthly Advance Report on Durable Goods Manufacturers’ Shipments Inventories and Orders, released by the U.S. Census Bureau last week.
Exclusive of the transportation segment, new orders in April were up 0.4% year over year, according to the report.
The index is up in April following a 0.2% month-over-month increase in core capital goods orders in March.
- Total shipments in April were up 2.3% YoY to $285.7 billion.
- Unfilled orders stood at $1.4 trillion in April, up 7.9% YoY, following an increase in March.
- Total inventories were up 1.3% YoY to $528.5 billion in April.
- Unfilled orders for capital goods were about $1 trillion, up 10.5% YoY.
- Total inventories of capital goods were up 3.1% to $256.8 billion in April.
Orders exceed expectations
The slight gain posted in total new orders for durable goods in April was not expected, according to a recent Wells Fargo research note on the index that had predicted a dip in order volume.
“Consider where we were in January, when durables had declined in five out of the previous seven months and fast-forward to today, where April marks the third consecutive monthly increase in durable goods orders,” the note said.
Excluding nondefense aircraft, every major durables category posted an increase in the last month. Orders for autos and parts were up 12.7% year over year, though Wells Fargo economist and research note co-author Shannon Seery Grein told Equipment Finance News on Thursday that the auto sector is particularly vulnerable to inflation. 
“You’re seeing some initial signs of stabilization, whether that’s the ISM Manufacturing Index approaching expansion, or industrial production, particularly manufacturing production, having some strength in the beginning of the year, and this durable goods data,” she said.
Financing remains active despite higher costs and uncertain futures on interest rates. “I think the outlook for the economy is much more important than financing costs,” Seery Grein said. “If the outlook is for the economy to keep growing, I think you’ll have a little bit more incentive to undertake the [capital expenditure] plan because you’re confident that it’s going to pay off.”
Transportation orders rise
Transportation equipment orders were up the last three consecutive months. Total orders in April amounted to $96.2 billion, up 1.2% or $1.1 billion YoY.
Shipments of transportation equipment totaled nearly $93 billion, up 3.4% MoM and 2.7% YoY.
“For auto specifically, I would say that was much more of an upward surprise than then that continued strength and high tech just based on recent trends,” Seery Grein said.
April auto production figures indicate that motor vehicle and parts production were up 3.6% compared to its pre-pandemic highs.
“I think this is just another piece of evidence that’s consistent with an industrial sector that’s stabilizing,” Seery Grein said. “But we remain cautious in terms of when we’re going to see a turnaround in terms of manufacturing activity, and particularly demand until we see more clarity in terms of what the Federal Reserve is doing.”
