US durable goods orders jump in October, led by surge in aircraft

A gauge of business investment in the US jumped in October, boosted by a sharp increase in orders for civilian aircraft.

Total durable goods orders grew 4.8% month-on-month to reach $239.4bn, according to the Department of Commerce, easily surpassing the 1.1% rise penciled in by economists.

That was almost entirely due to a sharp 94.1% rise in the volatile non-defence aircraft and parts category, where orders rocketed to $21.82bn.

Nevertheless, excluding those from the transportation sector, durable goods orders increased by 1.0% to $151.2bn (consensus: 0.2%).

The key category of orders for capital goods excluding those from defense and for aircraft, which was widely considered a lead indicator for investment trends in the economy, edged up by 0.4% month-on-month to $63.05bn (consensus: 0.3%).

"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; however, this morning’s report could be the first sign of the firming we would need for our investment forecast to be realized. Within the detail of the report, we see broad-based strength," said Rob Martin at Barclays Research.

Nonetheless, following Wednesday´s data Martin lowered his third quarter US GDP tracking estimate by three tenths of a percentage point to 2.4%, referencing lower than expected aircraft shipments and slightly lower than expected inventory accumulation.