Last updateWed, 28 Oct 2020 4pm

Durable Goods Orders Up for Fifth Consecutive Month

New orders for manufactured durable goods in September increased $4.3 billion or 1.9% to $237.1 billion, the U.S. Department of Commerce announced. This increase, up five consecutive months, followed a 0.4% August increase. Excluding transportation, new orders increased 0.8%. Excluding defense, new orders increased 3.4%.

IHS: U.S. Manufacturing Expands for Fourth Straight Month

Goods producers signaled the quickest improvement in the health of the manufacturing sector since the start of 2019, as highlighted by the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) posting 53.3, up fractionally from 53.2 in September. October data signaled a fourth successive monthly expansion and a further move away from the substantial contraction seen in April.

Despite the rate of production growth slowing at the start of the fourth quarter, the expansion in new orders accelerated and was the sharpest since January 2019. The upturn broadly stemmed from domestic clients as new export orders fell for the first time since July.

Texas Manufacturing Expands for Fifth Straight Month

Texas factory activity expanded in October for the fifth month in a row following a record contraction due to the COVID-19 pandemic, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose three points to 25.5, indicating a slight acceleration in output growth. Perceptions of broader business conditions continued to improve in October.

Other measures of manufacturing activity also point to stronger growth this month. The new orders index advanced five points to 19.9, and the growth rate of orders index inched up to 14.3. The capacity utilization index rose from 17.5 to 23.0, while the shipments index was largely unchanged at 21.9.

Small Business Optimism Highest Since February

The NFIB Optimism Index rose 3.8 points to 104.0 in September, a historically high reading. Nine of the 10 Index components improved and one declined. The NFIB Uncertainty Index increased 2 points to 92, up from 75 in April.

A net negative 6% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, an improvement of 9 points from August but still below pre-crisis levels. Owners expecting higher real sales volumes increased 5 points to a net 8% of owners.

U.S. Industrial Production Fell in September

According to the Federal Reserve, industrial production fell 0.6% in September, its first decline after four consecutive months of gains. The index increased at an annual rate of 39.8% for the third quarter as a whole. Although production has recovered more than half of its February to April decline, the September reading was still 7.1% below its pre-pandemic February level.

Manufacturing output decreased 0.3% in September, but it advanced at an annual rate of 53.7% in the third quarter. The index for durable manufacturing fell 0.5% in September.

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