Economic Headwinds Slow Manufacturing Growth to a Crawl

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Economic headwinds buffeting the U.S. manufacturing industry in July somewhat abated in August, according to an advance report from the U.S. Census Bureau. New orders for manufactured durable goods increased 0.1 percent on the month to $224.9 billion, exceeding expectations for a 0.5 percent contraction. The news follows a downwardly revised contraction of 8.1 percent, from 7.5 percent, in July, which was led by a tremendous decrease in the production of transportation equipment.

Orders for transportation equipment are often sensitive to short-term and seasonal trends, and are therefore volatile. Excluding transportation, new orders for manufactured durable goods actually declined 0.1 percent on the month, missing expectations for an increase of 1 percent. This indicates that not only did transportation equipment orders drive the decline in July, but the headline increase in August, as well.

Consistent with strong car sales, orders for motor vehicles and car parts led the August increase in transportation equipment.

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