24/7 Wall St.

The U.S. Commerce Department has released its Durable Goods report for the month of October and it was a strong number across the board. 24/7 Wall St. would remind investors, readers, and economists that durable goods is one of the most volatile readings of them all. These can look strong in a weak economy and you can get awful numbers in a good economy. The reason is because it measures the big ticket items, and it can be greatly skewed by plane and auto orders.

Wednesday’s report showed that new orders for manufactured durable goods in October increased 4.8% (by $11.0 billion) to $239.4 billion. Bloomberg was calling for just 1.5% growth. That was the fourth consecutive gain and followed a 0.4% rise in September. The change on a year-over-year basis was up 2.1% in October versus 1.6% in September.

Excluding transportation, new orders increased just 1.0%. That still beat the 0.2% expectation from Bloomberg and was higher than the 0.2% gain in September.

Excluding defense, new orders increased 5.2%. Transportation equipment led the increase with a 12% gain (by $9.5 billion) to $88.2 billion.

Nondefense new orders for capital goods in October increased by a whopping 14.5% (by $10.2 billion) to $80.1 billion. Shipments decreased $0.4 billion (-0.6%) to $71.5 billion, unfilled orders increased $8.7 billion (1.3%) to $703.1 billion, and inventories decreased $0.6 billion (-0.4%) to $169.6 billion.

Shipments of manufactured durable goods in October rose 0.1% (or by $0.2 billion) to $234.6 billion in October.

Inventories have now risen four consecutive months. October’s increase was minimal at $0.1 billion ($383.7 billion) and that followed a virtually unchanged September increase.

It’s hard to start making changes to fourth-quarter GDP and this data was before the election. That being said, gains like this can have a spillover effect and may actually tick up the formal fourth-quarter GDP expectations.