Durable Goods Orders Increase 0.8%

Gain due to aircraft and motor vehicle orders

New orders for manufactured durable goods in September increased $1.6 billion or 0.8% to $207.8 billion, the U.S. Census Bureau announced on Oct. 29. This was the fourth increase in the last five months and followed a 5.5% August decrease.

The gain in September orders was due to a bounce back in aircraft and motor vehicle orders from the collapse in August. When transportation equipment is excluded, September durable goods orders declined 1.1%. Furthermore, nondefense capital goods orders excluding aircraft is a good indicator of capital equipment activity in the private sector, and it fell 1.4% in September," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.

The September durable goods report is consistent with our view that the current recession is being driven by consumers who are overwhelmed with debt and constrained from spending by the lack of income growth and credit availability, he added. Capital goods activity is declining because the slack in factories and labor markets means that existing equipment and facilities are not being fully utilized, which negates the need to new buy equipment and build new structures. The industrial sector is merely reacting to the downturn, it is not leading the recession."

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