U.S. durable goods orders rise above expectations in October, equipment spending to rise modestly in Q4

U.S. durable goods orders came in above expectations in October. Durable goods orders were up 4.8 percent, as compared with consensus forecast of 1.7 percent. Core capital goods orders came in strong too, rising 0.4 percent sequentially in October, as compared with the decline of 1.4 percent in September. Shipments of core capital goods also increased in October. It was up 0.2 percent on a sequential basis.

Core capital goods orders and shipments are an important input to the BEA’s estimate of equipment investment in GDP. Equipment investment is expected to rise modestly for the remainder of this year, said Barclays in a research report. Both shipments and orders have not shown a sustained upward movement that might indicate a near-term acceleration in equipment investment. But October’s report might be the initial sign of the strengthening that would be needed for the investment projection to be realized, said Barclays.

Looking at the detail of the report, there was widespread strength. Most categories of orders and shipments recorded strong growth with the exception of aircraft shipments. Excluding transportation, orders rose strongly 1 percent, despite another decline in defence spending. On an three-month moving average basis, core orders are expanding at 4.4 percent, said Wells Fargo in a research report.

Manufacturers’ inventories of durable goods remained the same in October. Overall, the October report indicates modestly weaker than anticipated aircraft shipments and slightly lower inventory accumulation than expected.

The FxWirePro's Hourly Strength Index of USD was slightly bullish at 65.427. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex