Durable Goods Orders Tumbled in October

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The U.S. Department of Commerce reported on Wednesday that October’s reading on durable goods contracted by 1.2% to $236 billion month over month. The consensus estimate from Bloomberg called for a rise of 0.4% following an increase of 2.2% in September.

Orders for durable goods excluding transportation were up by 0.4%, lower than Bloomberg’s consensus estimate for a 0.5% gain. September’s reading was revised up to a gain of 1.1% from an uptick of 0.7% reported on a preliminary basis.

Excluding orders for defense goods, new orders dropped 0.8%.

There is a core capital goods reading that came in with a month-over-month decline of 0.5%, well below the consensus estimate for a gain of 0.5%. Year over year, the core reading rose 8.1%, below the revised September year-to-date gain of 8.7%.

There were some positive readings inside the October report. There was a 0.7% month-over-month gain in computer and electronic product orders. Defense aircraft parts posted a 5.5% gain to $4.23 billion.

Inventories of manufactured durable goods rose 0.1% to $404.1 billion in October, and that is now up in 15 of the past 16 months. There had been a 0.6% gain in September. Primary metals led the inventory increase with a 0.4% gain to $33.9 billion.

Nondefense new orders for capital goods decreased by $3.4 billion (down 4.5%) to $72.3 billion in October. Shipments decreased by $1.4 billion (1.9%) to $72.37 billion and unfilled orders were unchanged at  $705.23 billion.

Each monthly durable goods report is subject to revision, and there are times that those revisions can be significant. Each of these Commerce Department reports are based on a panel of approximately 5,000 reporting units that represent approximately 3,100 companies from the manufacturing sector.