Durable Goods Orders Increase on Demand for Military Aircraft
Orders for durable goods rose 0.4% in October, mainly on a jump in demand for military aircraft, the U.S. Commerce Department said Nov. 26.
Orders for military aircraft surged 45.3% in October. But overall orders for business equipment, such as machinery and electrical gear, unexpectedly declined in October, a sign that recent increases in corporate investment may not persist.
Bookings for nonmilitary capital goods, excluding aircraft, fell 1.3% for a second straight month. Economists projected a 1% gain, according to the Bloomberg survey median.
An inconsistent pattern of investment in equipment shows companies are waiting to see if demand is sustained as global markets struggle to improve. At the same time, spending by American households probably will hold up and underpin manufacturing as the job market strengthens and gasoline prices continue to fall.
“There might be a little more caution with investment if a lot of your growth is coming from abroad,” said Gennadiy Goldberg, U.S. strategist at TD Securities USA in New York. “We’re not concerned about durable goods orders completely falling off a cliff, but some slowdown here is to be expected”
Bookings declined last month for metals, machines, computers and electrical equipment, figures showed Nov. 26. Demand for motor vehicles rebounded.
The last time orders declined in consecutive months for nonmilitary capital goods excluding aircraft, which are considered a proxy for future business investment, was April and May.
Excluding transportation equipment, which often is volatile from month to month, total bookings dropped 0.9%, the most this year, the data showed.
Demand for nondefense goods decreased 0.6% after a 1.2% slump.
The median forecast of 79 economists surveyed by Bloomberg called for a 0.6% drop in total durable goods orders. September was revised to a 0.9% decrease, previously reported down 1.1%. Estimates ranged from a 3% decline to a 3% gain.
The durable goods data also reflected a 0.1% decrease in bookings for civilian aircraft, according to the Commerce Department’s report. Boeing Co., the Chicago-based aerospace company, said it received 46 orders last month after 122 in September.
