U.S. durable goods orders likely to rise in Sep, core capital goods to mark a decline

Durable goods orders in the United States are expected to have risen during the month of September, while core capital goods to have marked a decline during the period. The September Commerce Department durable goods orders report is scheduled to be released on Thursday, 27 October at 08:30EDT (12:30GMT).

We expect an increase in the overall measure of +0.4 percent m/m in September, versus the +0.1 percent m/m reading that occurred in August. This should come alongside an ex-transportation increase of +0.5 percent m/m in September, versus the -0.2 percent m/m reading that occurred in August.

In terms of core capital goods orders (capital goods orders, non-defense, ex-aircraft), an overall decrease of -0.5 percent m/m is expected in September, versus the +0.9 percent m/m reading seen in August.

On balance, the economy continues to grow thorough 2016 and broader improvement in purchasing activity should be reflected in durable goods orders data in the coming months. Accordingly, a modest upward pressure is likely to be seen in September, yielding a +0.3 percent m/m increase, with some risk to the downside.

Looking back at the August report, following the downward pressure seen in civilian aircraft (-21.9 percent m/m in August, after increasing +73.7 percent m/m in July), offset by a +24.2 percent m/m increase seen for defense aircraft, new orders for durable goods came in well above expectations for August (unchanged m/m).

Meanwhile, the core forward looking indicator, orders of non-defense capital goods, ex-aircraft increased +0.6 percent m/m, following the +0.8 percent m/m increase seen in July, keeping 3Q16 on a significantly improved footing.