US factory orders beat forecasts with 1.8% September gain

• The previous reading for factory orders was +0.1%
• Factory orders excluding transportation rose 0.5%, against +0.3% before
• Revisions to durable goods orders came in at +1.9% versus +1.8% preliminary
• Durable goods excluding transportation, revised: +0.5%, matching the +0.5% preliminary figure
• Durable goods excluding defense revised up to +2.3% from +2.2% preliminary
• Nondefense capital goods orders excluding aircraft: +0.6% revised, against +0.5% preliminary

The report is solid and points to some momentum in manufacturing, though a jump in the JOLTS number published at the same time has overshadowed it. Yields in the US are pushing higher after both releases, and USD/JPY sits at its session high of 158.37.

As background, the Census Bureau publishes this data once a month at 10 am ET, roughly five weeks after the month it covers has closed. Officially titled the full report on Manufacturers’ Shipments, Inventories and Orders, it lands about a week after the advance durable goods release and broadens that picture by folding in nondurable goods.

Total new orders for manufactured goods, measured month over month, make up the headline number. Petroleum and coal products, chemicals, food, paper and plastics all fall under nondurables. Orders and shipments are effectively the same thing for most nondurable industries, since those products aren’t made to order and carry no backlog. Because refined petroleum accounts for a large share, moves in oil and commodity prices pass directly into the nondurables numbers. Another gauge markets watch is factory orders excluding transportation, a measure that removes the volatile aircraft and motor vehicle categories.

Revised durable goods figures are part of the release, and at times they can differ substantially from the advance estimates. Economists watch the revisions to core capital goods orders and shipments — nondefense capital goods excluding aircraft — closely. Those shipments feed the equipment investment component of GDP, so the revised numbers are capable of shifting growth estimates.

Manufacturers’ inventories, unfilled orders and the inventory-to-shipments ratio also appear in the release. Together they give a sense of whether factories are adding to stock or running it down, and of how much work is already in the pipeline.

With most durables data already published and nondurables mostly tracking commodity prices, the report seldom moves markets. What it offers is a completed picture of manufacturing and the revisions that feed GDP tracking.