Core orders were down 0.3% m/m in September (forecast: +0.3%) and revised sharply lower in August (-1.6% m/m, initial: -0.8%). Business investment gets reflected in capital goods spending, and the obvious takeaway is that businesses are shielding their cash in anticipation of a few rocky times ahead.
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Orders for long-lasting manufactured goods fell in September, the latest sign of a slowdown at U.S. factories.
Shipments in the same category rose by 0.5% in September following a 0.8% decrease in the previous month. Manufacturing, which accounts for about 12 percent of the economy, has also been hit by efforts by businesses to reduce an inventory bulge and by slowing global demand. Central bank officials meet this week to discuss policy but are expected to leave the benchmark interest rate near zero, where it has held since December 2008.
Excluding transportation, new orders were down by 0.4%, and excluding defense, new orders were down by 2.0%.
Housing continues to outperform the economy. August’s revised numbers show a 7% decrease overall, a 4.7% decrease excluding defense, and a 1.6% decrease excluding aircraft.
After seeing initial weakness, stocks have fluctuated over the course of the trading day on Tuesday but largely maintained a negative bias. Analysts expect the economy slowed to a 1.6 percent annual from a 3.9 percent expansion in the second quarter. The government will publish its advance third-quarter GDP estimate on Thursday.
Chad Moutray is the chief economist, National Association of Manufacturers. This led to a 2.9 percent decrease in new orders for transportation equipment despite a rebound in motor vehicle and parts sales (up 1.8 percent). Core capital goods shipments were previously reported to have dropped 0.4 per cent in August.
However, RBC Economics pointed out that even with declines in August and September, orders of nondefense capital goods increased an annualized rate 6.2% in the third quarter, marking the first increase in the measure in a year.
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New orders for durable goods – turbines, trucks and other products created to last at least three years – declined a seasonally adjusted 1.2 per cent in September from a month earlier, the Commerce Department said on Tuesday.
