Executive Briefings

U.S. Commerce Department Reports Fall in Durable Goods Orders

U.S. durable goods orders fell in September, confirming another weak quarter for business spending, but core capital goods showed some signs of a recovery. The Commerce Department said orders for items meant to last three years decreased $0.3bn, or 0.1 percent, to $227.3bn in September, following a 0.3 percent increase in August.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 1.2 percent. It was the steepest drop since February and followed three straight months of strong gains. Economists polled by Reuters had forecast a 0.3 percent increase in September.

Such spending remains 3.9 percent lower so far this year than in the same period a year ago. But several economists said the bottom for these core capital goods has already been reached, particularly in the oil and gas sector, with more gains ahead.

“The underlying trend is beginning to rise… but we had hoped for a bit better in September,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told The Wall Street Journal. “The upward trend should re-emerge in the October data.”

As the WSJ reports, a lack of business investment has been a major drag on the U.S. economy’s growth in recent years.

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Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 1.2 percent. It was the steepest drop since February and followed three straight months of strong gains. Economists polled by Reuters had forecast a 0.3 percent increase in September.

Such spending remains 3.9 percent lower so far this year than in the same period a year ago. But several economists said the bottom for these core capital goods has already been reached, particularly in the oil and gas sector, with more gains ahead.

“The underlying trend is beginning to rise… but we had hoped for a bit better in September,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told The Wall Street Journal. “The upward trend should re-emerge in the October data.”

As the WSJ reports, a lack of business investment has been a major drag on the U.S. economy’s growth in recent years.

Read Full Article