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The March report on durable goods from the US Census Bureau is out and for the second of the past three months new orders are down. The March drop totals -4.2%, with transportation equipment down the most, -12.5%, largely due to a $7.7 billion drop in orders for nondefense aircraft and parts.

Shipments of manufactured goods rose 1% in March, with machinery up 6.5%, to $32.9 billion, its highest total since the data was first published in 1992. Unfilled orders for manufactured goods rose for the 23rd of the last 24 months, up 1.2%, with computer equipment up the most, 0.6%.

Inventories increased by 0.4% in March, to a total of $375.1 billion, with transportation equipment up the most, 0.7%, the highest ever recorded. Defense orders and shipments rose by higher percentages than non-defense orders and shipments, and inventories for defense goods also fell by 2.2%.

The worst news from the Census Bureau’s report is that new orders for non-defense capital goods fell by -10.5% in the month and compared with March 2011 fell by nearly $10 billion. Defense capital goods orders rose by 10.3% in the month, but are about $4 billion less than in March 2011.

Inventories of non-defense capital goods rose by 11.9% year-over-year, while inventories of defense capital goods fell by -4.3%.

On the whole, the report indicates an economy that can’t decide whether or not it’s growing or stagnating. With new orders down and inventories up, the good news we’ve been seeing from the manufacturing sector could soon turn sour.

The Census Bureau report is available here.

Paul Ausick