US durable goods orders fall on weakness in transportation equipment sector
ORDERS for long-lasting US manufactured goods fell more than expected in October as orders for motor vehicles and parts dropped amid strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” automakers.
The Commerce Department’s Census Bureau said on Wednesday (Nov 22) that orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, dropped 5.4 per cent last month, also weighed down by declines in bookings for civilian aircraft. Data for September was revised lower to show orders for these goods rising 4.0 per cent instead of the previously reported 4.6 per cent.
Economists polled by Reuters had forecast durable goods orders would decline 3.1 per cent. Durable goods orders rose 4.0 per cent on a year-over-year basis in October.
Manufacturing, which makes up 11.1 per cent of the economy, is shuffling along as higher interest rates cool demand. Since March 2022, the US central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25 per cent-5.50 per cent range.
Transportation equipment orders plunged 14.8 per cent last month after increasing 11.6 per cent in September. Motor vehicle and parts orders fell 3.8 per cent, likely because of shortages caused by the UAW’s strikes at a number of US factories owned by General Motors, Ford and Chrysler parent Stellantis. The industrial action has since ended.
Civilian aircraft orders tumbled 49.6 per cent. Boeing reported on its website that it had received 123 orders for civilian aircraft, compared to 224 in September.
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There were increases in orders for computers and electronic products as well as fabricated metal products. But orders for electrical equipment, appliances and components fell. Machinery orders were unchanged.
Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dipped 0.1 per cent after slipping by a downwardly revised 0.2 per cent in the prior month. These so-called core capital goods orders were previously reported to have risen 0.5 per cent in September.
Core capital goods shipments were unchanged for a second straight month. Shipments of non-defence capital goods dropped 0.3 per cent following a 0.2 per cent decline in the prior month.
These shipments feed into the calculation of equipment spending in the gross domestic product report. Business spending on equipment spending contracted in the third quarter. The economy grew at a 4.9 per cent annualised rate last quarter. REUTERS
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