U.S. Durable Goods Orders Fall 2.0% In October, In Line With Estimates

(RTTNews) - With orders for transportation equipment and computers showing notable decreases, the Commerce Department released a report on Wednesday showing a pullback in new orders for U.S. manufactured durable goods in the month of October.

The report said durable goods orders fell by 2.0 percent in October after jumping by an upwardly revised 4.1 percent in September. The drop in orders matched economist estimates.

Following two consecutive monthly increases, orders for transportation equipment showed a notable decrease, contributing to the pullback in durable goods orders.

The Commerce Department said orders for transportation equipment tumbled by 5.9 percent in October, led by a steep drop in orders for commercial aircraft and parts.

Excluding the decrease in orders for transportation equipment, durable goods orders edged down by a more modest 0.1 percent in October compared to a 0.2 percent increase in September.

The decrease in ex-transportation orders came as a surprise to economists, who had been anticipating a 0.4 percent increase.

As mentioned above, orders for computers and related products plunged by 7.6 percent, while orders for communications equipment and fabricated metal products also showed notable decreases

The report also showed a disappointing reading on futures business spending, as orders for non-defense capital goods excluding aircraft fell by 1.2 percent in October following a 1.4 percent drop in September.

Shipments of non-defense capital goods excluding aircraft, which get plugged into GDP, also fell by 0.2 percent for the second consecutive month.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The continuing slump in U.S. non- defense capital goods (ex. aircraft) orders and shipments suggests that business equipment investment contracted over the entire second half of this year."

"The survey evidence on capex intentions has been pointing to a rebound in equipment investment for some time now, but it just isn't coming through in the actual hard data," he added.

Next Thursday, the Commerce Department is scheduled to release a separate report on factory orders in the month of October. The report includes data on orders for both durable and non-durable goods.