US durable goods orders grow in September, but details weaker

Orders for goods made to last more than three years grew more quickly than expected during the previous month, led by gains for orders of civilian aircraft and automobiles, but the details of the latest government data were much weaker.

According to the Department of Commerce, in seasonally adjusted terms, durable goods orders increased at a month-on-month pace of 0.4% in September (consensus: 0.6%) to reach $274.72bn.

But the estimate for the prior month was revised up by four tenths of a percentage point to a monthly gain of 0.2%.

Nevertheless, excluding those from the transportation sector, orders shrank by 0.5% (consensus: 0.2%) and August's rise was revised down from 0.3% to unchanged.

Orders for transportation equipment jumped by 2.1% on the month to reach $95.45bn, led by a 21.9% leap in the volatile civilian aircraft category and a 2.2% rise in those for motor vehicles and parts.

So too, so-called core capital goods orders - which exclude defence and civilian aircraft - dropped by 0.7% over the month, instead of the 0.2% dip anticipated, while August's 1.4% jump was marked down to show a rise of 0.8%.

In comparison to a year earlier, total durable goods orders were ahead by 10.9% and those for core capital goods by 9.5%.

"It now looks increasingly likely that manufacturing will slip into recession in the months ahead. The sector has outperformed the survey data for much of this year, but that gap is now narrowing as two of its biggest supports—rising auto output and resilient capex—are fading fast," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"Remember, though, that manufacturing is only about 11% of GDP; the rest of the economy—excluding housing—is in far better shape. Manufacturing can be in recession while the economy as a whole is not."

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