New orders placed with US factories for durable goods declined in September as a drop in bookings for commercial aircraft more than offset a pickup in business equipment.
The value of bookings for durable goods — items meant to last at least three years — fell 0.8%, following a downwardly revised decline of the same magnitude in August, Commerce Department figures showed Friday. Excluding transportation equipment, orders rose 0.4%.
Orders for core capital goods, a proxy for investment in business equipment excluding aircraft and military hardware, increased 0.5% after a 0.3% advance a month earlier.
In addition to the drop in commercial aircraft bookings, orders fell for computers and electronic products as well as machinery. Orders increased for motor vehicles and fabricated metals.
| Metric | Actual | Estimate |
|---|---|---|
| Durable goods orders | -0.8% | -1.0% |
| Capital goods orders excl. defense & aircraft | +0.5% | +0.1% |
| Capital goods shipments, excl. defense & aircraft | -0.3% | 0.0% |
Though many businesses are still committed to making long-term investments, uncertainty about the November presidential election and future demand has caused some firms to be cautious about expansion plans. Elevated borrowing costs have also limited spending by some companies.
At the same time, further interest-rate cuts by the Federal Reserve may help to bolster demand and invigorate a struggling manufacturing sector.
What Bloomberg Economics Say…
“Core durable goods orders increased modestly in September. The proxy for investment, however, was roughly flat from a year earlier. Election uncertainty has paralyzed many businesses.”
—Eliza Winger
The report showed core capital goods shipments declined 0.3%. Economists will use the figure to help fine-tune their estimates of equipment investment in the government’s third-quarter gross domestic product report. Core capital goods shipments have declined in four of the last five months.
The latest results may have also been affected by the Boeing Co. machinist workers’ strike as well as disruptions caused by Hurricane Helene that swept ashore late last month.
The Commerce Department’s durable goods report showed commercial aircraft bookings, which are volatile from month to month, slumped 22.7% after sliding nearly 20% a month earlier.
While Boeing reported 65 orders in September, up from 22 a month earlier, the government data don’t always correlate with the planemaker’s monthly figures.
A debilitating strike by 33,000 Boeing workers has shut down factories across the Pacific Northwest for more than a month, and the union on Wednesday rejected a new labor contract.
Recent purchasing managers surveys illustrate a struggling manufacturing sector. The Institute for Supply Management’s manufacturing gauge contracted for a sixth month in September.
— By Mark Niquette (Bloomberg)
