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Demand cracks for durable goods
Orders for big ticket items off more than expected in September reading from government.
October 27, 2005: 9:25 AM EDT

NEW YORK (CNN/Money) - Orders for durable goods fell in September, the government said Thursday, as the demand for big ticket items was weaker than with Wall Street expectations.

The Census Bureau reported that new durable goods orders fell 2.1 percent in the month, compared with a revised 3.8 percent gain reported in August. Economists surveyed by Briefing.com had forecast that orders would fall only 1.2 percent in the month.

New orders for U.S.-made durable goods sank an unexpectedly deep 2.1 percent last month as aircraft orders plunged, but even non-transportation orders dropped one percent, a government report showed on Thursday.

Transportation orders fell 4.7 percent in September as civilian aircraft orders plummeted 41.6 percent due to a strike at Boeing Co. by its production workers. But even stripping out the drop in demand for transportation goods, new orders fell one percent. Economists had looked for a 0.8 percent rise outside of transportation.

The report also showed a 1.2 percent decline in orders for non-defense capital goods, excluding aircraft, which economists look to as a proxy for future business spending.

The drop in demand for long-lasting manufactured goods was likely to renew concerns that soaring energy prices could be weighing on the economy. Upward revisions to August orders, however, could temper those concerns.

The Commerce Department said shipments of durable goods last month edged up just 0.1 percent. That figure was weaker than some economists had expected and could lead forecasters to reduce projections for third-quarter growth.

The weakness in orders last month was fairly broad-based, with demand for computers and electronic products off 3.6 percent, electrical equipment orders down 3.5 percent and fabricated metal products 1.2 percent lower.

One bright spot was motor vehicle orders, which rose a robust 4.7 percent, the largest one-month increase since December 2004.

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