Orders to U.S. factories turned positive in September after a two months decline continuing their roller coaster ride of the past year.
The September gain of 1.7% was fueled by a large 57.5 percent surge in orders for commercial aircraft. It followed a 0.1 percent fall in August and a 2.8 percent drop in July. The August and September numbers and their revisions were released together this morning by the Commerce Department in Washington D.C. All three months of the second quarter were positive averaging 1.97 percent each. Two of the three months of the first quarter were negative and the quarter averaged -1.07 percent.
Core capital goods, including machinery and electronics, ordered by business, fell 1.3 percent in September. Placements in machinery, construction equipment and other industrial items saw large declines.
Economists consider these core goods a better measure of business spending and investment plans than the overall numbers because they exclude volatile aircraft and defense orders. The drop was the second in three months and may indicate weakening economic growth in the third quarter.
Estimates of U.S. economic growth in the second half of the year have been revised lower by many analysts and are roughly 1.8 percent in the third quarter and 2.0 percent in the fourth.
The economy expanded 1.1 percent on an annual basis in the first quarter and 2.5 percent in the second. Third quarter GDP figures will be released this Thursday, the estimate from the Bloomberg survey is 2.0 percent.
The 16 day partial government shutdown during the first two weeks of October may have prompted business to cut back on spending and investment in the latter part of September and into October. The government faces another potential debt limit dispute in February.
Chief Market Strategist
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