Fewer commercial aircraft bookings largely behind durables’ decline
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — Orders for long-lasting U.S. goods fell in October, largely because of weaker demand for commercial aircraft. Bookings for electrical equipment and computers also fell.
The Commerce Department said Wednesday that orders fell 0.7% to mark the second monthly decline in a row.
Economists surveyed by MarketWatch had expected orders to drop 1.5%. Durable goods are big-ticket items such as autos, planes, appliances, furniture and computers designed to last at least three years.
Yet if the transportation sector is excluded, orders would have shown an increase of 0.7%.
That’s because bookings for transportation equipment, a particularly volatile category, sank 4.8% last month. Orders for commercial aircraft plunged 16.4% to account for the entire decline in that segment.
Orders for autos, whose consumer sales have risen sharply over the past few months, revved up 6.2%.
Orders minus defense, which can also swing sharply month to month, rose 0.2%.
In a negative sign, orders for durable goods outside the defense and transportation sectors fell 1.8% after two straight strong increases. That closely followed category, known as core capital goods, provides a broader indication of demand in the rest of the U.S. manufacturing sector.
The decline in orders for core capital goods was concentrated in computers, communications gear, electrical equipment and appliances.
Bookings for electrical equipment and appliances fell 5.2% and while orders for communications gear declined 1.6%. Orders for computers and related products dipped 0.4%.
On the upside, orders for primary metals rose 3.0% and bookings for heavy machinery climbed 1.6%.
Shipments of durable goods, meanwhile, jumped 1.3% last month to mark the fifth increase in six months. The rate of shipments is used by the government to help calculate quarterly reports on U.S. economic growth.
Inventories of durable goods climbed 0.5% last month, the 22nd straight increase.
Orders for September, meanwhile, were revised to show a 1.5% decline instead of an originally reported 0.6% drop.
Data on durables often undergo sharp revisions, so economists tend to focus on longer-term trends. Over the past three months orders have fallen an average of 0.7%, but they’ve risen an average of 0.4% if the transportation sector is omitted.
Jeffry Bartash is a reporter for MarketWatch in Washington.
