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Last Update: 26-Oct-11 09:22 ET
Decline in Aircraft Orders Lead to a Contraction in Durable Orders, Business Investment Strengthened
As expected, a drop-off in orders for aircraft led to a decline in durable goods orders in September. Durable orders fell 0.8% after falling 0.1% in August. The drop, however, was better than expected. The Briefing.com consensus predicted durable goods orders would decrease 1.0%.
Nondefense and defense aircraft orders fell 25.5% and 33.9% respectively in September after both sectors increased approximately 25% in August. Motor vehicles and parts orders fell 2.7% in September.
Excluding the transportation sector, new durable goods orders were up 1.7% and easily surpassed the consensus estimate for a 0.4% gain.
Every sector outside of the transportation sector saw positive gains except for communications equipment in September. Those orders fell 0.6% after increasing 4.9% in August.
Importantly, orders for primary and fabricated metals increased a healthy 2.6% and 1.9% respectively. These goods are necessary inputs for later-stage manufacturing processes and suggest that manufacturers are seeing strong demand up the production line.
Demand for business investment was strong. Orders of nondefense capital goods excluding aircraft increased 2.4% in September, up from 0.5% growth in August. Shipments, which directly affect third quarter GDP, were down 0.9% in September.
It seems that most of the increase in business investment orders will not be shipped until the fourth quarter. As a result, the GDP gains from increased business investment will occur next quarter.
Nondefense and defense aircraft orders fell 25.5% and 33.9% respectively in September after both sectors increased approximately 25% in August. Motor vehicles and parts orders fell 2.7% in September.
Excluding the transportation sector, new durable goods orders were up 1.7% and easily surpassed the consensus estimate for a 0.4% gain.
Every sector outside of the transportation sector saw positive gains except for communications equipment in September. Those orders fell 0.6% after increasing 4.9% in August.
Importantly, orders for primary and fabricated metals increased a healthy 2.6% and 1.9% respectively. These goods are necessary inputs for later-stage manufacturing processes and suggest that manufacturers are seeing strong demand up the production line.
Demand for business investment was strong. Orders of nondefense capital goods excluding aircraft increased 2.4% in September, up from 0.5% growth in August. Shipments, which directly affect third quarter GDP, were down 0.9% in September.
It seems that most of the increase in business investment orders will not be shipped until the fourth quarter. As a result, the GDP gains from increased business investment will occur next quarter.
