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Durable Goods Orders, Business Investment Gain in September

Posted by Joseph Trevisani on Oct 25, 2017 1:16:28 PM

Capital investment continued at a lively pace in September, giving the economy the best back to back months of business spending in two years and suggesting that growth will remain strong into the fourth quarter. 

The Commerce Department reported Wednesday that orders for non-defense capital goods excluding aircraft, the statistical category that is considered a proxy for future business investment, rose 1.3 percent last month as it had in August. This is the best performance since capital spending jumped 3.1 percent in June and July 2015. August's result was revised up from 1.1 percent. Economists in the Reuters survey had forecast a much lower gain of 0.5 percent.  These goods are 3.8 percent higher on the year. 

Shipments of these capital products, also called  'core capital goods' and used by the Bureau of Economic Analysis in its GDP calculation, climbed 0.7 percent after jumping 1.2 percent in August.  Shipments have increased for eight straight months. 

The Atlanta Federal Reserve  retained its 2.7 percent prediction for third quarter economic growth after the release. The first reading on the U.S. annualized GDP rate will be issued on Friday. Estimates range from 1.8 percent to 3.5 percent with the median guess at 2.5 percent. The economy expanded at a 3.1 percent rate in the second quarter.  

Overall orders for durable goods rose 2.2 percent in September  from 2.0 percent in August, supported by a 5.1 percent jump in the volatile transportation sector.  In practice transportation orders are dominated by Boeing Company of Chicago which at 72 aircraft orders in September more than doubled the 33 of the previous month.  

Orders for computers and electronic equipement rose 1.6 percent in September following a 1.8 percent surge in August.  Automobile and parts orders edged  up 0.1 percent after gaining 2.8 percent in August. Purchases of primary metals, machinery, electrical equipement and applicances dropped.

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Thomson/Reuters, WWM Alpha Trader

Capital Goods

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Durable Goods

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