U.S. durable goods orders fall sequentially in October

U.S. durable goods orders dropped in October on a sequential basis. Durable goods fell 1.2 percent month-on-month, as compared with expectations of a rise of 0.5 percent. Core orders also came in weaker than anticipated, falling 0.5 percent sequentially. Part of the miss was due to transportation orders, which declined 4.3 percent. Non-defense aircraft orders dropped 18.6 percent after rising over 30 percent in each of the earlier two months.

Historically, durable goods orders have shown some within-quarter seasonality, with the initial month of the quarter being the softest and orders firming as the quarter progresses. Meanwhile, core shipments grew 0.4 percent sequentially on the heels of 1.2 percent and 1.3 percent rises in September and August respectively.

The subdued headline figure driven by the larger-than-expected decline in aircraft orders, and surprising weakness in core orders have lowered the estimate for equipment investment, stated Barclays. But the details of the report gave a modest boost to the inventory investment forecast.

“On net, and after rounding, our Q4 GDP tracking estimate was unchanged at 2.7 percent”, added Barclays.

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