Orders for USA durable goods rise strong 3 percent in October

Orders for U.S.-made durable goods rose a seasonally adjusted 3% last month, the Commerce Department said Wednesday.

Shipments of the so-called core capital goods that are used in the calculation for equipment spending in the gross domestic product government measurement dropped 0.4% in October after a revised upwardly gain of 0.7% for September.

Durable goods are typically bulky or heavy products created to last at three years, such as trains, planes and automobiles. Despite an increase in new orders, shipments of non-defense capital goods fell 1.4 percent in October.

The report comes following data earlier this month showing a strong increase in output of manufacturing in October. A key category that serves as a proxy for business investment spending slipped 0.1 percent in September.

“The orders suggest there is some momentum as we head into the end of the fourth quarter”, said Jacob Oubina, senior USA economist at RBC Capital Markets LLC in NY, whose forecast for business equipment demand was the closest in the Bloomberg survey.

EUR/USD was trading at 1.0581 from around 1.0587 ahead of the release of the data, GBP/USD was at 1.5086 from 1.5088 earlier, while USD/JPY was at 122.75 from 122.72 earlier.

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Commercial aircraft orders showed the largest growth last month, rising 81%. Demand for non-defence goods jumped 3.2 per cent after falling 1.6 per cent. Orders outside of transportation were down 2.7% through the first 10 months of the year.

Hard goods orders probably scraped out a slight gain of 0.3%, which helped in recovering the last month’s decline. Overall, this past year has been a tough one for manufacturers, with a number of headwinds dampening demand and production.

Still, business investment is running behind last year’s pace, dampening the potential for a stronger US economy.

The hit to the US economy has been softened by the fact that consumer spending, which accounts for 70 percent of economic activity, has remained strong this year.