US durable goods orders fall unexpectedly in September

A key measure of investment, orders for goods made to last more than three years, turned lower in September, with fewer Defence orders acting as the main drag.

Thus, total durable goods orders edged lower by 0.1% in September when compared to the month before, to reach $242.4bn, according to the Department of Commerce.

In comparison to the year-ago level, durable goods orders slipped by 0.4%.

Economists had forecast growth of 0.1% month-on-month.

However, August´s gain was revised higher to show a rise of 0.3% over the month versus an initially estimated advance of 0.1%.

Military aircraft and parts orders were especially weak, shrinking 44.8% month-on-month to $2.9bn and pulling orders for transportation equipment lower by 0.8% on the month to $77.5bn.

Excluding the transportation sector, orders increased by 0.2% (consensus: 0.2%) but were up by 0.7% if defence-related ones are taken out.

Orders for machinery were higher by 1.2% to $30bn but roughly offset by a 1.2% drop in those for computers and electronic products.

A widely-followed leading indicator for business investment, so-called 'core' orders for capital goods, which strip out those for aircraft, fell by 1.2% month-on-month (consensus: 0.0%).

Shipments of core capital goods meanwhile increased 0.3% over the month to $62.4bn.

"Core capital goods orders and shipments are a key input to the BEA’s estimate of equipment investment in GDP.

"In our forecast, we anticipate a modest increase in equipment investment for the remainder of this year. Neither orders nor shipments have displayed a sustained upward movement that would indicate a near-term acceleration in equipment investment," Rob Martin and Blerina Uruci at Barclays Research said in a research note sent to clients.

Following Thursday´s durable goods orders data, Barclays trimmed its forecast for theird quarter US gross domestic product by one tenth of a percentage point to 2.9%.

"[Total orders excluding the transportation sector have] not changed appreciably in recent years, but close inspection shows modest shifts in the underlying trend. Bookings ex-transportation were drifting lower during 2015 and most of 2016, but they have increased or held steady in the past three months, leaving an upward tilt," said Michael Moran at Daiwa Capital Markets.