Demand for long-lasting U.S. factory goods remained robust last month, pointing to ongoing strong business investment.
New orders for durable goods — products designed to last at least three years, like dishwashers and aircraft — rose a seasonally adjusted 2.2% in September from a month earlier, the Commerce Department said Wednesday. New orders are up 5.2% in the first nine months of this year compared with the same period in 2016.
Economists surveyed by The Wall Street Journal had expected overall orders to increase 0.8% in September from the prior month.
September’s rise in new orders for all durable goods is the second consecutive monthly gain and follows a robust 2% rise in August. The latest data show manufacturers in the U.S. headed into the fourth quarter on a strong footing. September’s rise in durable-goods orders reflects ongoing investment by businesses in new capital goods like transportation equipment, capital goods and communications equipment, suggesting optimism about the economy.
“Overall, business equipment investment appears to be going from strength to strength, providing further reason to believe that the economy will continue to grow at a healthy pace in the fourth quarter as well,” said Andrew Hunter, an economist at Capital Economics, in a note to clients.
The Commerce Department will release its initial reading on gross domestic product, the broadest measure of U.S. output, for the third quarter on Friday. Economists polled by The Wall Street Journal expect a 2.7% annual pace of expansion.
Transportation equipment orders led September’s increase, rising 5.1%, the biggest increase since June. A volatile category, orders for civilian airplanes and parts, rose 31.5%, after strong gains in August too. That reflected strong demand for the nation’s largest aerospace firm, Boeing Co. It reported 72 orders for September, up from 33 in August. Excluding the transportation segment, orders rose 0.7% in September.
New orders for nondefense capital goods excluding aircraft, considered a proxy for business spending on equipment, rose 1.3%. Durable-goods statistics are volatile and subject to large revisions.
The report comes amid broadly positive signs from the U.S. manufacturing sector, despite the impact of three recent major Atlantic hurricanes — Harvey, Irma and Maria.
The Commerce Department this month reiterated that it couldn’t isolate the effects of Hurricanes Harvey and Irma, which hit the U.S. in late August and September. The Federal Reserve earlier said that Hurricane Harvey contributed to a sharp decline in U.S. industrial production in August, but output rebounded in September.
Source: Dow Jones