Defense Hardware Spurs Big Jump in Durable Goods Orders

U.S. orders for durable goods, boosted by a surge in defense hardware orders, jumped 12.8% in October, the largest single-month increase since the Commerce Department began tracking orders in 1992.

At the same time, new home sales rose slightly and jobless claims, as reported by the Labor Department, took an unexpected leap.

Orders for durable goods, excluding transportation equipment, increased 3.4%. The increase in orders is the first since May, Bloomberg reported.

The Commerce Department also reported that new home sales rose 0.2% to 880,000 at an annual rate in October.

Durable goods orders were led by a 206.3% increase in defense hardware orders, the report said. Bloomberg reported that analysts had anticipated an increase of 2.0% for all durable goods orders.

Higher orders and sales of durable goods are good news for the struggling trucking industry. Durable goods are manufactured products that are expected to last at least three years. An increase in orders can boost demand for dry van and flatbed trucking services – demand that can also be increased by a jump in new home construction.

Analysts believe that lower interest rates have contributed to sales of new homes increasing in all regions surveyed, with the exception of the Midwest, news services said.

The economy did receive a bit of bad news, as initial jobless claims unexpectedly jumped by 54,000, according to the Labor Department.

The increase brought the total number of workers filing for unemployment benefits to 488,000 for the week that ended Nov. 24.

The number of continued claims shot up by 301,000 to 4.02 million for the week ended Nov. 17, the biggest one-week jump in 27 years. That number is the highest since Dec. 25, 1982, when the total was 3.82 million, Reuters said.

The four-week moving average, a tool used to soften weekly fluctuations in the number of initial jobless claims, fell 2,000 to 454,000, the Labor Department said.

Job cuts, especially in the manufacturing sector, are bad for the trucking industry, which relies on factory orders and consumer spending for much of its business. When production is down and job cuts are up, people tend to feel less confident about the economy and reduce their spending as a result.

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