New orders for durable goods decreased 1.1 percent in September, led by a 2.7 percent fall in transportation equipment. Over the past year, orders are down 5.4 percent to $248.2 billion, about 5 percent below the recent high of $262.2 billion in September 2018 but more than 70 percent above the March 2009 recession low (see chart). Excluding the volatile aircraft category, orders were off 0.9 percent for the month and 0.9 percent below September 2018, essentially a flat trend over the past year (see chart again). The flat trend in new orders for durable-goods excluding aircraft suggests slow growth for the equipment investment segment of gross domestic product.
Within the report on new orders for durable goods are data on new orders for capital goods, or business investment. This subcategory is particularly important for two reasons. First, business investment can have a major impact on future productivity trends, and productivity is critical for helping offset cost increases as well as raising living standards over the long term. Second, capital-goods orders tend to be early indicators of turns in the business cycle. Real new orders for core capital goods — that is, real non-defense capital goods excluding aircraft — is one of the indicators in AIER’s Leading Indicators index.