A Look into Demand and Freight Indicators

Let’s look into what’s happening in the industrial sector, specifically manufacturing. It’s no secret that manufacturing is a major driver of freight demand, so understanding its trends can give us a clearer picture of what’s on the horizon for logistics and supply chains. Today, we’ll focus on two key metrics: new orders for manufactured goods and the Institute for Supply Management’s (ISM) manufacturing index.

Durable Goods Orders: A Mixed Picture

In November, total new orders for durable goods fell 1.1% m/m, but excluding transportation equipment (volatile sectors like vehicles and aircraft), they were nearly flat.

• Year-over-Year (y/y): Total orders dropped 5.2%, but orders without transportation equipment rose 1.5%.

Core Capital Goods: A Bright Spot

Core capital goods (nondefense, excluding aircraft) rose 0.7% m/m, the best gain since August 2023, and were up 1.1% y/y—a solid sign of investment strength. Adjusted for inflation, these orders still grew 0.5% m/m but remain 1.6% lower y/y, showing gradual improvement.

ISM Manufacturing Index: Signs of Stability

The ISM manufacturing index improved in December, up 0.9 points to 49.3%. While still contracting (below 50%), the sector shrank more slowly. Even better:

• New Orders and Production: are in expansion territory.
• Backlogs: Sharp improvement, hinting at stronger production—and freight—down the line.

What’s Next for Freight?

Despite challenges, the data shows resilience in manufacturing. Rising orders and improving ISM metrics suggest freight demand tied to this sector may stabilize or grow modestly.

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