The numbers: U.S. durable-goods orders fell 0.4% in September, after a 1.3% rise in the prior month, the Commerce Department said Wednesday. Economists surveyed by the Wall Street Journal were expecting a 1% decline. This was the first decline after four straight gains.
Orders for “core” durable goods – nondefense capital goods orders excluding aircraft – were up 0.8% in September after a 0.5% gain in the prior month. Shipments of core goods rose 1.4%.
Key details: Much of the weakness was in autos and aircraft. Excluding transportation, durable-goods orders were up 0.4% after an 0.3% gain in August.
Orders for defense goods rose sharply in September. Excluding defense, durable goods orders were down 2%.
The government released total inventory and shipment details for the factory sector for the first time in this advance report.
The data show shipments of factory goods rose 0.6% in September after a 0.1% gain in August. Shipments of durable goods rose 0.4% after a 0.5% drop in the prior month.
Inventories of factory goods rose 0.8% in September after a 0.7% gain in the prior month. Inventories of durable goods rose 0.9%, matching the gain in the prior month.
What are they saying? “Business equipment investment probably contracted slightly in the third quarter. But rather than signaling weak demand, that weakness is entirely due to supply constraints. But that doesn’t mean things are going to get significantly better over the next couple of quarters,” said Michael Pearce, senior U.S. economist at Capital Economics, in an email to clients.
Big picture: The pickup in “core” orders, a proxy for business investment, is a good sign for the factory sector. There was a concern that orders might be tailing off after a strong post-pandemic rebound.
Market reaction: Stocks
were set to open lower Wednesday after a record-setting session.