Durable Goods Orders in US Decrease for Second Month
Bloomberg News
Orders for durable goods unexpectedly dropped in September for a second month as demand for machinery and computers slumped.
Bookings for goods meant to last at least three years decreased 1.3 percent after falling 18.3 percent in August, a Commerce Department report showed today in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 0.5 percent gain. Excluding transportation equipment, which is often volatile month to month, orders declined 0.2 percent.
Companies are looking for more signs of sustained consumer demand before making high-dollar investments, even as households benefit from strong job gains and pared-down debt. As markets in Europe and emerging nations slow, fewer exports will probably also damp orders in coming months, indicating American manufacturing will cool.
'Exports aren't doing anything great because Europe's in a really bad funk,' Michael Montgomery, U.S. economist at IHS Global Insights in Lexington, Massachusetts. 'Prospects for sales one or two years down the line are decent, but they're not booming.'
Bloomberg survey estimates for durable goods ranged from a decline of 1.7 percent to an increase of 5 percent after a previously reported 18.4 percent drop in August.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines and communications equipment, dropped 1.7 percent, the most since January, after a 0.3 percent gain the previous month.
GDP Impact
Shipments of non-defense capital goods, used in calculating gross domestic product, fell 0.2 percent after rising 0.1 percent.
The figures may prompt some economists to cut forecasts for third-quarter GDP. A report later this week is projected to show the world's largest economy grew at a 3 percent annualized rate from July through September after a 4.6 percent gain in the previous three months that marked the best performance since the end of 2011, according to the median forecast of economists surveyed by Bloomberg.
Cars and trucks remain a source of strength for manufacturing and the economy. Vehicles sold at a 16.3 million annualized rate last month, capping the best quarter since 2006, according to figures from Ward's Automotive Group. General Motors Co., Chrysler Group LLC, and Nissan Motor Co. reported 19 percent increases in U.S. sales in September from a year ago.
Auto Sales
U.S. car and truck sales probably will rise for an unprecedented sixth straight year in 2015 and might exceed 17 million for the first time since 2001, said Joe Hinrichs, Ford's president of the Americas.
'We think the housing market will continue to improve, which does influence the truck market,' Hinrichs told investors on Sept. 29. Ford expects U.S. auto sales to rise to a record 18 million by the end of the decade.
GM will build the electric drive unit for the next-generation Chevrolet Volt in Warren, Michigan, and plans to announce almost $300 million in new investment in the state by the end of the year, the company said in a statement. GM said it has so far invested about $1.82 billion in projects in the state dedicated to vehicle electrification.
Durable goods data were hurt by a 2.8 percent drop in demand for machinery, the biggest decline since February 2013. Bookings for computers and electronic equipment fell 2.5 percent, the most this year.
To contact the reporter on this story: Lorraine Woellert in Washington lwoellert@bloomberg.net
To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net
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