U.S. Durable Goods Orders Rose More Than Forecast in September

U.S. durable goods orders rose in September by more than forecast, indicating manufacturers continue to benefit from steady demand and lean inventories.

Bookings for durable goods -- or items meant to last at least three years -- increased 1.9% from the prior month following a revised 0.4% rise in August, Commerce Department data showed Tuesday. The median estimate in Bloomberg’s survey of economists called for a 0.5% gain in September.

Core capital goods orders, a barometer for business investment which excludes aircraft and military categories, rose 1% in September, also more than forecast, after an upwardly revised 2.1% advance a month earlier.

U.S. Durable Goods Orders Rose More Than Forecast in September

The data underscore a manufacturing sector that continues to strengthen from the depths of the recession. It shows demand is stabilizing after the coronavirus upended global supply chains, reduced inventory levels and suppressed consumer demand and corporate investment.

The durables report showed orders picked up for metals, motor vehicles and electronic products.

The value of core business goods orders climbed in September to $68.7 billion, a six-year high.

Capital Goods

Shipments of core capital goods, used to form estimates of business equipment investment within the government’s gross domestic product report, increased 0.3% from the prior month. While that marked a slowdown from a 1.5% gain in August, it left such shipments up 32.1% on a three-month annualized basis through September after slumping 19.7% at the end of the second quarter.

Third-quarter GDP is forecast to rise at a record 32% annualized pace after the worst setback since the 1940s in the prior three-month period when the economy shutdown to contain the coronavirus.

Orders for motor vehicles and parts climbed 1.5% after a 4.1% decline in August. Excluding transportation, durable goods orders rose 0.8% in September, twice as much as forecast and following an upwardly revised 1% August gain.

One of the hardest-hit sectors continued to drag on American factory data. Orders for civilian aircraft and parts were $1.8 billion in September after minus $3.2 billion a month earlier. Boeing Co. reported no orders in September, compared to 8 in August. Bookings have evaporated this year as Covid-19 curbs air travel and the planemaker tries to get its 737 Max program back on track.

Other factory data have been mixed. While a recent report from the Federal Reserve manufacturing output fell in September, it followed solid increases in the previous four months. Regional figures from the Fed banks of Philadelphia, Dallas and Kansas City have shown faster paces of growth in October.

©2020 Bloomberg L.P.

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