U.S. Factory Orders Rise 1.8% in September, Led by Aircraft Demand

Orders placed with U.S. factories increased 1.8% in September to a seasonally adjusted $677.2 billion, the Census Bureau reported Tuesday, November 3. It was the third consecutive monthly gain, following an August increase revised upward to 0.3% from the initially reported 0.1%. The $12.2 billion rise marked a stronger month for manufacturing demand, but aircraft orders supplied an outsized share of the advance.

Transportation equipment was the biggest contributor, with new orders up 4.6%. The increase was not confined to planes and other vehicles, however. Factory orders excluding transportation rose 1.3%, offering a clearer view of demand across the rest of manufacturing and showing that the month’s gains extended beyond a single volatile industry.

Factory orders measure the value of new bookings received by manufacturers rather than the amount of merchandise they produced or delivered during the month. Large orders can enter the statistics well before customers receive the goods, especially for aircraft with long production schedules. That makes the mix of September bookings as important as the headline percentage.

Aircraft demand supplies the largest lift

Transportation-equipment orders rose by approximately $5.3 billion to $119.9 billion, accounting for more than two-fifths of September’s $12.2 billion increase in total factory orders. The Census Bureau’s full manufacturers’ shipments, inventories and orders report provides the broader monthly picture, including nondurable goods and revisions to the earlier durable-goods estimates.

Within transportation, orders for nondefense aircraft and parts jumped 28.3%, making commercial aviation the most conspicuous source of strength. Defense aircraft and parts orders also increased. Aircraft bookings can shift substantially from one month to the next as customers place large orders, change delivery schedules or cancel previously arranged purchases. One strong month therefore does not necessarily indicate that aircraft assembly or deliveries accelerated by a similar amount.

Other transportation categories were less buoyant. Orders for motor vehicles and parts edged up 0.1%, and ships and boats recorded a decline. Those differences matter because the headline transportation figure groups businesses with very different production cycles. A single large aircraft order can move its monthly total much more than routine changes in automobile demand.

September’s full report also revised the earlier durable-goods estimate. The advance release issued October 27 had put durable-goods orders up 1.8% at $345.4 billion. The complete report increased the gain to 1.9%, or $345.7 billion. This is a revision to the same September activity, not evidence of a separate rise since the advance figures were published.

Orders outside transportation also improve

The 1.3% increase in orders excluding transportation is an important counterweight to the aircraft story. Machinery bookings rose 1.5%, while orders for computers and electronic products increased 0.8%. Fabricated metal products and primary metals also registered gains. Electrical equipment, appliances and components moved in the other direction, declining 0.3%, so the expansion was widespread without being uniform.

The report showed a 0.6% increase in orders for nondefense capital goods excluding aircraft, a category often used to judge companies’ plans to buy equipment. That figure was revised from a 0.5% preliminary advance. Shipments of the same group of goods rose 1.2%, a stronger change that describes equipment moving through factories rather than new commitments arriving on the books.

Separating these two measures helps put the figures into perspective. Orders for capital goods can provide an early indication of spending intentions, but an order is not the same as a completed investment. Shipments are closer to actual delivery, although neither series by itself establishes the inflation-adjusted contribution of equipment spending to economic growth.

The full September release includes both long-lasting products and goods typically consumed more quickly. Durable-goods orders rose 1.9% to $345.7 billion, while nondurable-goods orders increased 1.8% to about $331.6 billion. Nondurable categories tend to have shorter order-to-delivery cycles, so their movements do not carry the same implications for future production backlogs as a rise in aircraft contracts.

These statistics are expressed in current dollars. A higher dollar value can reflect changes in quantities ordered, prices or both, rather than a matching increase in physical output. Seasonal adjustment removes recurring calendar patterns, but it does not convert the results into an inflation-adjusted measure of manufacturing activity.

Shipments rise as order backlogs expand

Manufacturers’ shipments increased 1.3% in September to $668.5 billion after an August gain of 0.1%. Shipments show goods leaving manufacturers and provide a different view from the new-orders series. The simultaneous increase in the two measures suggests that factories were both taking in additional business and moving more products to customers during the month.

Unfilled orders, which represent work booked but not yet completed, rose 0.9% to approximately $1.62 trillion. Backlogs can support future factory activity because producers still have orders to fulfill. Their value does not, however, guarantee a particular production schedule: deliveries may be spread over years, and orders can be modified or cancelled.

Manufacturers’ inventories grew 0.4% to about $976 billion, extending their run of monthly increases to twelve. Rising inventories are not inherently positive or negative. Factories may build stocks to keep pace with anticipated demand, or unsold goods may accumulate when shipments fail to keep up. September’s increase in shipments gives useful context, but the monthly inventory total alone cannot establish which explanation dominates.

The Census Bureau estimates these figures from a panel weighted toward larger manufacturing companies and revises prior results as additional information arrives. The methodology also uses changes in shipments and unfilled orders to estimate new orders in industries where companies do not report every booking directly. Those features are especially relevant when interpreting small revisions or unusually sharp changes in individual product categories.

The next advance durable-goods report, covering October, is scheduled for November 25. The full October factory-orders report is scheduled for December 3, when the Census Bureau will also incorporate updated information into previously released figures.