Durable Goods Orders Show Unexpected Decrease In October

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Orders for goods meant to last for at least three years unexpectedly decreased in the month of October, according to a report released by the Commerce Department on Wednesday, although the report also showed a notable upward revision to pace of order growth in September.

The report showed that orders for durable goods fell 0.6 percent in October following a revised 2.0 percent increase in September. Economists had expected orders to increase by 0.5 percent compared to the 1.0 percent increase originally reported for the previous month.

A drop in orders for machinery contributed to the unexpected drop in durable goods orders, with orders for machinery falling by 8.0 percent in October after jumping by 8.8 percent in September.

Orders for computers and electronic products also showed a notable 2.1 percent decrease in October, although the decrease was partly offset by increases in orders for primary metals and electrical equipment.

The report also showed a notable increase in orders for transportation equipment, which rose by 1.5 percent in October following a 2.5 percent increase in September. Orders for commercial aircraft and parts showed a substantial 50.8 percent increase.

Excluding the increase in orders for transportation equipment, durable goods orders fell by 1.3 percent in October compared to a 1.8 percent increase in the previous month.

While the decrease surprised economists, who had expected ex-transportation orders to increase by 0.6 percent, the drop came after a notable upward revision to the previous month's data, which had previously shown a 0.9 percent increase.

Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, "Net-net, the data remains lumpy, as over the past 6 months, orders have been up, down, up, down, up, down."

"This is not typical of post recession recoveries which have seen V bounces and provides further evidence that comparison's to post WWII recoveries may not apply this time," he added.

Additionally, the report showed that orders for non-defense capital goods, excluding aircraft, which is seen as a good indicator of business spending, fell 2.9 percent in October following an upwardly revised 2.6 percent increase in September.

The Commerce Department also said that shipments of durable goods edged down by 0.2 percent in October following a 1.6 percent increase in September.

The report also showed that inventories of durable goods fell for the tenth consecutive month, although inventories fell by less than 0.1 percent in October after falling by 1.2 percent in the previous month.

Orders for goods meant to last for at least three years unexpectedly decreased in the month of October, according to a report released by the Commerce Department on Wednesday, although the report also showed a notable upward revision to pace of order growth in September. The report showed that orders for durable goods fell 0.6 percent in October following a revised 2.0 percent increase in September. Economists had expected orders to increase by 0.5 percent. (Market News Provided by RTTNews)