Durable Goods Orders Up on Transportation Strength

The data is a key predictor of the economic health.

Median forecasts from Action Economics’ survey were for a decline of 0.6%.

The increase, after two monthly declines, came mainly on the strength of transportation equipment, which also was up after two down months.

US durable goods orders surprise to the upside due to transportation:

Orders of durable goods climbed 0.4% m/m last month whereas consensus had looked for a monthly decline in orders of 0.6%. Furthermore, September’s drop of 1.3% was revised to a smalles decline of 0.9%, another positive.

That is, however, also the only positives in today’s report. The better-than-expected headline durable goods orders print was driven entirely by transportation orders. If you exclude these, orders fell 0.9% compared with consensus’s +0.5% prediction.

Furthermore, capital goods orders (a proxy for next quarter’s business investment) declined 1.3% vs. +1% expected while capital goods shipments (a proxy for this quarter’s business investment) fell 0.4% vs. +0.5% expected.

Overall, a much weaker report than the headline DGO number suggests. EURUSD is rising as a result, and is now up more than 0.2% for the day trading just north of 1.25.

Excluding transportation, new orders decreased 0.9%. And excluding defense, new orders decreased 0.6%.

Revised seasonally adjusted September figures for all manufacturing industries were:

• New orders, $500.3 billion, revised up from $499.4 billion;
• Shipments, $503.7 billion, up from previously reported $503.4 billion;
• nfilled orders, $1,169.1 billion, up from $1,168.7 billion;
• Total inventories, $655.5 billion, from $655.2 billion.

Related: U.S.-NAFTA Freight Sees 8.2 percent Annual Gain, reports BTS