US Durable Goods Orders Hold Steady in October

Nov. 27, 2012
Orders for durable goods edged up by a mere 48,000 in October, marking the fifth increase in the last six months.

New orders for manufactured durable goods were virtually unchanged in October from September, the Commerce Department said Tuesday.

Orders for durable goods, items expected to last at least three years, edged up by a mere 48,000 in October.

It was the fifth increase in the last six months.

The department noted that superstorm Sandy, which battered the northeast in late October, had not impacted the data.

Overall, new orders were up 5.3% from October 2011.

“Given the high degree of uncertainty in the global economic climate and from U.S. fiscal policy, it is something of an upside surprise that orders for long-lasting goods were flat in October, although this number has been volatile in recent months, rising by 9.2% in September after a 13.1% decline in August,” said Cliff Waldman, senior economist for the Manufacturers Alliance for Productivity and Innovation (MAPI).

“In spite of a raft of global economic troubles and the prospect of a fiscal mess in the early part of the new year, orders for non-defense capital goods, excluding aircraft, a proxy for business equipment spending, were up by 1.7% in October, although they were flat on a year-over-year basis, corroborating the flat equipment and software spending growth seen during the third quarter of this year,” he added. “Clearly, business decision makers are engaging in just enough capital spending to keep their enterprises going.  In a shaky global economy and a highly uncertain U.S. policy environment, there is not going to be much entrepreneurial business expansion of the type that would result from, and reinforce, a strong economic expansion.

“Recent data continue to suggest that U.S. factory sector growth, while having slowed significantly, is at least staying above water,” Waldman concluded. “In October, demand for the output of industry sectors that are fundamental to manufacturing supply chains—such as machinery, primary metals, and fabricated metals—were all positive, although machinery demand was down by 3.3% on a year-over year basis.  While slow but positive growth remains the most likely path for U.S. manufacturing over the short-term, U.S. and world economies that still have the potential to deliver negative surprises suggest that the risks remain on the downside for U.S. goods producers.”

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