Durable Goods Orders Decrease for Second Month
Orders for durable goods dropped unexpectedly in September, falling for a second month, on waning demand for machinery and computers that signals companies are reluctant to invest in updating equipment.
Bookings for goods meant to last at least three years decreased 1.3% after declining 18.3% in August, a Commerce Department report showed in Washington. The median forecast of 83 economists surveyed by Bloomberg News called for a 0.5% gain.
Companies are looking for more signs of sustained consumer demand before making high-dollar investments, even as households benefit from strong job gains and pared-down debt. As markets in Europe and emerging nations slow, fewer exports will probably also damp orders in coming months, indicating American manufacturing will cool.
“Clearly businesses seem a little worried, not so much about U.S. growth but global growth, so they’re being very cautious,” said Nariman Behravesh, chief economist at IHS Inc., who forecast a 0.8% drop in orders. “The worry is they retreat back into their shells.”
Bloomberg survey estimates for durable goods ranged from a decline of 1.7% to an increase of 5% after a previously reported 18.4% drop in August.
Excluding transportation equipment, which is often volatile month to month, bookings declined 0.2%, the report showed.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines and communications equipment, dropped 1.7%, the most since January, after a 0.3% gain the previous month.
Shipments of non-defense capital goods, used in calculating gross domestic product, fell 0.2% after rising 0.1%.
The figures may prompt some economists to cut forecasts for third-quarter GDP. A report later this week is projected to show the world’s largest economy grew at a 3% annualized rate from July through September after a 4.6% gain in the previous three months that marked the best performance since the end of 2011, according to the median forecast of economists surveyed by Bloomberg.
Cars and trucks remain a source of strength for manufacturing and the economy. Vehicles sold at a 16.3 million annualized rate last month, capping the best quarter since 2006, according to figures from Ward’s Automotive Group. General Motors Co., Chrysler Group LLC, and Nissan Motor Co. reported 19% increases in U.S. sales in September from a year ago.
