Durable Goods Orders Drop Unexpectedly

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Durable Goods Orders Drop Unexpectedly

Analysts had expected orders to rise a slight 0.6%.

WASHINGTON -- New orders for manufactured durable goods dropped in September on a decline in volatile transportation orders, government data showed Tuesday.

New orders fell 1.3% month-over-month to $241.6 billion, the Commerce Department said.

Analysts had expected orders to rise a slight 0.6%.

The decline followed a steep 18.3% decrease in August, also driven by a sharp fall in transportation orders.

Excluding transportation equipment, orders slipped 0.2% in September.

Transportation orders slid 3.7%, led by a 16.1% dive in civilian aircraft orders.

“The weak September report on the demand for long-lasting (durable) goods suggests that the darkening world economic and geopolitical picture is having an impact on already fragile business and consumer confidence. ” said Cliff Waldman, director of economic studies at the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation. 

“While year-over-year, year-to-date gains remain moderate, short-term weakening is the key concern in the context of a slipping world economy whose negative impact is augmented by an unusual burden of global political and military instability," Waldman added.

However there is some optimism. 

"The longer-term trend remains a positive one, much as it was for retail spending, " said Chad Moutray, chief economist, National Association of Manufacturers. " Over the course of the past 12 months, durable goods orders have risen 3.3%, which is a decent pace.

And spending is moving in the right direction as well. 

“Amidst high corporate profitability, U.S. capital spending should be on a convincingly positive track," adds Waldman. "But the sense that global growth is slipping from its already tenuous state and that regional instabilities in the Middle East and Russia are becoming global threats are distracting corporate decision makers from fundamental business analysis and focusing their attention on dark clouds and uncertainty.

“Moderate growth remains the likely path for U.S. manufacturing, but the downside risks for short-term factory sector performance are growing considerably.”

Copyright Agence France-Presse, 2014

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