- US new orders for factory durable goods jumped 3.7% in September 2013, which were above market expectations for a 2.3% increase and followed a revised 0.2% (was 0.1%) increase in August and an 8.1% plunge in July.
- The headline orders gain in September, however, was concentrated in an outsized 46% jump in the volatile aircraft component. Excluding the transportation sector, orders dipped 0.1%, which were below market expectations for a 0.5% gain.
- Orders for non-defence capital goods ex-aircraft declined 1.1% following a downwardly revised 0.4% (was 1.5%) increase in August and a 3.5% (was 3.3%) drop in July. The corresponding shipments measure, which is the component of the report that feeds directly into the Bureau of Economic Analysis’ (BEA) estimate of quarterly business investment dipped 0.2% following a 1.1% (was 1.3%) gain in August and 1.4% and 1.0% drops in July and June, respectively.
- Inventories of durable factory goods rose 0.9%, which was up from a 0.1% gain in August.
New orders for durable goods jumped a larger than expected 3.7% in September 2013 following a 0.2% gain in August and 8.1% plunge in July; however, most of the strength was concentrated in the volatile aircraft component, which surged 46.0% to retrace most of a 50.1% drop recorded in July. Excluding the transportation component, sales were down 0.1%, which was below the 0.5% gain that had been expected. Orders of non-defence capital goods exports excluding aircraft, a commonly used leading indicator for business capital spending, dropped 1.1% following a 0.4% gain in August that marked a sharp downward revision from the previously reported 1.5% increase in the month. The corresponding shipments measure, which enters directly into the BEA’s estimate of current-quarter business investment, declined as well, although by a modest 0.2% following a 1.1% (previously reported as 1.3%) gain in August and a 1.4% drop in July. Inventories of durable goods jumped 0.9% in September following a 0.1% rise in August.
The dip in shipments of non-defence capital goods excluding aircraft in September, along with earlier weakness in July, left the measure in the third quarter of 2013 as a whole down an annualized 2.9% from the second quarter. This marked the second consecutive quarterly decline after a 0.9% drop in the second quarter. Stronger imports of capital goods through July and August still suggest that overall business equipment investment managed a small increase in the third quarter of 2013, although our current monitoring implies just a 0.4% gain following a 3.2% increase in the second quarter. With that said, some offset, in terms of overall business investment, was provided by earlier-reported strength in construction spending, and the rise in durable goods inventories reported today is consistent with a stronger build in inventories in the third quarter of 2013 than the second quarter. Our monitoring of data to date remains broadly consistent with a 2.2% gain in overall third-quarter 2013 GDP that would be down just slightly from the 2.5% increase in the second quarter.
RBC