|
Durable orders slide
|
 |
October 27, 1999: 12:55 p.m. ET
September orders slip 1.3%, more than expected, led by cars and aircraft
|
NEW YORK (CNNfn) - Orders placed with U.S. manufacturers for big-ticket items fell 1.3 percent in September, the first decline in five months, led by a drop in demand for new cars and aircraft, the government said Wednesday.
Orders for durable goods -- items expected to last at least three years -- slipped to $204.9 billion on a seasonally adjusted annual basis in September, the Commerce Department said. The drop was more than economists' expectations of 0.4 percent decline and was the first since a 2.9 percent dip in April. August's gain was revised lower to 1 percent.
Even with the one-month drop, analysts were quick to caution that the economy is still exhibiting signs of strength, and that demand both at home and abroad for big-ticket U.S.-made goods isn't necessarily on the decline.
"With still strong domestic demand and improving international demand, the factory sector is continuing to recover from the sluggishness that resulted from the Asian economic crisis," said Steven Wood, a senior economist at Bank of America Securities in San Francisco.
Transportation orders drop
Indeed, the slower pace of durable goods orders will likely hold little influence over Fed policy makers and their Nov. 16 decision concerning whether to raise short-term interest rates. At their Oct. 5 meeting Fed officials opted to hold rates steady though indicated they were leaning toward raising them again in the near future.
That's because the numbers didn't give any clear indication that demand for U.S. goods is slowing down, reducing the threat of accelerating inflation.
Even so, bond investors took the numbers as a sign that the economy might be slowing just a tad. Just after noon ET, the benchmark 30-year Treasury bond was up 1/2 a point with a yield of 6.34 percent, down from 6.38 percent Tuesday.
Transportation equipment, led by airplanes, automobiles and parts, showed the largest decline, falling 3.9 percent to $47.1 billion after posting a 3.6 percent gain in August. Excluding transportation goods, which account for about a quarter of the index, the value of orders fell 0.5 percent after gaining a revised 0.2 percent in August.
Excluding defense items, durable goods orders slipped 1.4 percent. Year-to-date, new orders are up 7 percent from the same period last year.
Orders for primary metals slipped 0.8 percent to $15.5 billion after a 0.5 percent drop in August. Orders for industrial machinery and equipment rose 0.4 percent to $39.6 billion after a 2.1 percent drop in the previous month. Demand for electronics and electrical equipment gained 0.4 percent to $38.7 billion after rising 1.5 percent in August.
A volatile number
The report itself is considered to be one of the more volatile that Wall Street analyzes because of differences in how companies take in orders and fill them. A plant shutdown or weather-related delay in shipping can cause large swings in the monthly value of shipments compiled by Commerce.
Indeed, Hurricane Floyd's swath of disruption along the Eastern seaboard last month likely prompted variations in the numbers as factories shut down production or delayed shipment until the bad weather had passed, economists said.
"Durable goods orders have been steaming along, averaging 0.5 percent to 0.7 percent on trend since January," suggesting orders were due for a bit of a retracement, said Carl Weinberg, chief economist with High Frequency Economics.
Shipments of finished goods -- items ready to be used by the consumer without any additional tinkering -- slipped 1.9 percent in September. Unfilled orders -- orders recorded on the books but not yet filled -- rose by 0.6 percent.
Orders for non-defense capital goods fell 0.2 percent in September after rising 3.2 percent in August. Non-defense capital goods excluding aircraft -- a measure of business investment plans -- rose 3 percent in September after falling 1.3 percent in August.
|
|
|
|
|
|
Commerce Department
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
