Durable Goods For February Show A Weak Pulse

Like the products they represent, statistics on durable goods have a lot of moving parts, and because they are often revised, can seem like disembodied numbers. For the three months ended February, says the Commerce Department, shipments of durables have been falling. Orders and backlogs for new products have been rising, however, which points to an improving future for manufacturing, but the gains are all pretty small.

Shipments were down for the second month -- off 0.6 percent after a 0.1 percent drop in January. December brought a 2.4 percent increase in durables shipments of all sorts, with strength in raw metals, machinery and transportation equipment (motor vehicles and nondefense aircraft). By February, transportation goods were down three percent, and metals and machinery had faded to gains of 2.4 percent and 2.7 percent respectively.

Click on the graph for a larger image
Computers, a big component of durables ($31 billion of shipments of a total $180 billion for February), were promising in January but turned negative last month.

The orders component of this report is more forward looking, and while the figures were positive for February, showing a 0.5 percent increase, the rate of increase has slowed lately. Total orders were reported at $178 billion for the month, up $1 billion from January and $7.5 billion from December.

Orders for new aircraft were $2.4 billion, making up more than the total gain for February.

An comparison against economists' expectations, from Bloomberg:

Economists anticipated a 0.6 percent gain in orders, according to the median of 77 estimates in a Bloomberg News survey, after a previously reported 2.6 percent jump in January. Forecasts ranged from a decline of 2 percent to a 2 percent increase.

Excluding transportation equipment, orders were forecast to rise 0.6 percent, according to the survey median. The Commerce Department revised January data to show a 0.6 percent drop rather than the initially reported 1 percent decrease.

That's doubtful. A while ago I wrote about the share of employment that the goods-producing sectors make up ("Sharing The Pain Of Unemployment"), and found that manufacturing employment, as a share of the total U.S. workforce, had been in a secular decline since before I was born. And that's a long time.

Once again here's a graph of the numbers of people making things, from the St. Louis Federal Reserve's magical FRED system:

Click on the graph for a larger image
Durable goods workers are illustrated by the red line, while the black one shows nondurable employment. Although small proportions of the labor force, they were stable, if cyclical, from 1970 to the late 1990s or 2000, but have since fallen off a cliff. Keep in mind that the total workforce is now about 140 million.

From reader comments, I know the long slide in manufacturing industries is an emotional issue with many people. I'm one; my dad worked for the Radio Corporation of America for about 15 years, and I logged a few hours in factory jobs myself.

It's sad, but even if durable goods production soars in the short term, it's unlikely do much for the big picture of employment.

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