Orders for U.S. Durable Goods Probably Slumped on Airplanes

Photographer: Matthew Lloyd/Bloomberg

Visitors watch as a Boeing Co. 787 Dreamliner, operated by Qatar Airways, prepares to land on the second day of the Farnborough International Air Show in Farnborough, U.K., on Tuesday, July 10, 2012. Close

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Photographer: Matthew Lloyd/Bloomberg

Visitors watch as a Boeing Co. 787 Dreamliner, operated by Qatar Airways, prepares to land on the second day of the Farnborough International Air Show in Farnborough, U.K., on Tuesday, July 10, 2012.

Orders for U.S. durable goods probably plunged in August, reflecting a slump in demand for aircraft and slowing business investment, economists said before a report today.

Bookings for goods meant to last at least three years decreased 5 percent, the most since January 2009, after surging 4.1 percent in July, according to the median forecast of 79 economists surveyed by Bloomberg. A gain in orders for capital equipment such as machinery was probably not large enough to make up for the prior month’s fall, the data may also show.

Manufacturing, once a pillar of the economic recovery, has cooled, hurting companies like Caterpillar Inc. (CAT) as concern about the fiscal cliff of tax increases and government spending cuts that may take effect next year causes businesses to pull back. Slowing growth from Europe to China is also putting a dent in exports, another headwind for American factories.

The figures may reflect “cautious spending by businesses in response to signs of slowing global growth and the unsettled budget situation in the U.S.,” Michael Moran, chief economist at Daiwa Capital Markets America Inc. in New York, said in a note to clients.

The Commerce Department’s durable-goods report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from a decline of 9.4 percent to a 4 percent increase.

Civilian aircraft bookings, which are often volatile, slumped last month after a surge in July. Boeing Co. (BA), the largest U.S. aircraft maker, received an order for a single plane in August, down from 260 the prior month.

Business Investment

The underlying details of the report may help show the extent of the manufacturing slowdown. Bookings for non-defense capital goods excluding aircraft, considered a proxy for future business investment in items such as computers, engines and communications gear, rose 0.7 percent after dropping 4 percent in July and 2.7 percent in June, according to the survey median.

Caterpillar, the world’s biggest construction and mining equipment maker, this week cut its forecast for 2015 earnings after commodity producers reduced capital expenditures. While a global recession remains possible, Caterpillar is forecasting moderate and “anemic” growth through 2015, Chairman and Chief Executive Officer Doug Oberhelman said in a presentation to analysts on Sept. 24.

“We are in no way thinking we’re going to see a recession in 2013,” Oberhelman said. “Europe’s in recession today, probably going be a while to dig out.”

Fewer Exports

Exports dropped 1 percent in July as American companies shipped fewer automobiles, metals and consumer goods abroad, according to figures from the Commerce Department issued earlier this month.

A separate report from the Commerce Department today may show the U.S. is also suffering from a slowdown in business investment. The economy expanded at 1.7 percent annual rate in the second quarter, down from 2 percent in the first three months of the year, economists project revised figures will show. Data issued last month showed corporate spending on equipment and software rose at a 4.7 percent pace from April through June after expanding 5.4 percent in the first quarter.

Jabil Circuit Inc. (JBL) forecast fiscal first-quarter sales that fell short of analysts’ estimates on weaker demand, the St. Petersburg, Florida-based electronics supplier said Sept. 25 in a statement.

“Demand remained weak in most of our business segments,” Chief Executive Officer Timothy Main said in the statement.

To boost growth, the Federal Reserve this month said it would keep its target interest rate near zero until at least mid-2015 and began a third round of asset purchases, buying $40 billion in mortgage bonds a month until the labor market improves.

Another report today will show the number 375,000 people filed claims for jobless benefits last week, little changed from 382,000 in the previous period, according to the median forecast of economists surveyed ahead of Labor Department data.

                         Bloomberg Table

================================================================
                          Durables Durables Cap Goods  Initial
                            Orders Ex-Trans      Core   Claims
                              MOM%     MOM%      MOM%   ,000’s
================================================================

Date of Release              09/27    09/27     09/27    09/27
Observation Period            Aug.     Aug.      Aug.   22-Sep
----------------------------------------------------------------
Median                       -5.0%     0.2%      0.7%      375
Average                      -4.7%     0.2%      0.6%      376
High Forecast                 4.0%     1.4%      3.0%      385
Low Forecast                 -9.4%    -1.9%     -3.1%      365
Number of Participants          79       53        12       48
Previous                      4.1%    -0.6%     -4.0%      382
----------------------------------------------------------------
4CAST                        -5.0%     0.5%      ---       372
ABN Amro                     -4.0%     ---       ---       375
Action Economics             -4.5%     1.2%      ---       370
Aletti Gestielle             -4.0%     ---       ---      ---
Ameriprise Financial         -4.9%     0.7%      ---       378
Banca Aletti                 -6.0%     ---       ---      ---
Bank of the West             -4.3%     0.5%      ---      ---
Bantleon Bank AG             -5.0%     0.5%      ---      ---
Barclays                     -2.5%     0.4%      ---      ---
Bayerische Landesbank        -5.5%     0.2%      ---      ---
BBVA                         -2.0%    -0.5%      ---       377
BMO Capital Markets          -5.8%     0.0%      ---       375
BNP Paribas                  -4.9%     0.1%      ---       385
BofA Merrill Lynch           -4.0%    -1.4%      ---       375
Briefing.com                 -6.5%    -0.5%      ---       380
Capital Economics            -8.5%     0.0%      ---      ---
CIBC World Markets           -6.5%     0.8%      ---      ---
Citi                         -6.0%     1.0%      3.0%      375
ClearView Economics          -3.5%     ---       ---      ---
Comerica                     -3.0%     ---       ---      ---
Commerzbank AG               -6.0%    -1.0%      ---       380
Credit Agricole CIB          -6.5%    -0.5%      ---      ---
Credit Suisse                -7.0%     0.5%      1.0%      375
Daiwa Securities America     -2.5%     ---       ---      ---
Danske Bank                  -4.2%     ---       ---      ---
DekaBank                     -6.0%     1.1%      1.0%     ---
Desjardins Group             -5.0%     ---       ---       380
Deutsche Bank Securities     -4.0%     0.5%      0.5%      380
Deutsche Postbank AG         -4.0%     0.3%      ---      ---
Exane                        -3.5%     1.2%      ---      ---
First Trust Advisors         -5.9%    -0.2%      ---       378
FTN Financial                -6.0%     0.7%      ---      ---
Goldman, Sachs & Co.         -6.0%     ---       ---      ---
Helaba                       -5.0%     ---       ---       375
High Frequency Economics     -7.0%     0.0%      2.5%      370
HSBC Markets                 -6.5%     0.4%      0.8%      377
Hugh Johnson Advisors        -2.3%     ---       ---       370
IDEAglobal                   -3.0%     0.5%      ---       375
IHS Global Insight           -7.0%     ---       ---       375
Informa Global Markets       -5.0%     ---       ---       380
ING Financial Markets        -3.8%    -0.2%      ---      ---
Insight Economics            -4.5%     ---       ---       375
Intesa Sanpaulo              -5.5%    -0.5%      ---      ---
J.P. Morgan Chase            -6.3%     0.2%      ---       380
Janney Montgomery Scott      -2.0%     0.2%      ---      ---
Jefferies & Co.              -4.0%     ---       ---       370
John Hancock Financial       -0.2%     0.5%      ---       372
Landesbank Berlin            -5.2%     0.3%      ---       370
Lloyds Bank                  -4.4%     0.5%      ---       380
Maria Fiorini Ramirez         ---      ---       ---       370
Market Securities            -5.5%     ---       ---      ---
Mizuho Securities            -6.0%     ---       ---       380
Modal Asset                   ---      0.9%     -1.3%     ---
Moody’s Analytics            -5.6%     1.4%      ---       370
Morgan Stanley & Co.         -6.0%     ---       ---      ---
National Bank Financial      -4.3%     0.0%      ---      ---
Natixis                      -2.5%     0.7%      ---      ---
Nomura Securities            -6.5%    -1.0%      ---      ---
Nord/LB                      -4.5%     0.0%      ---       380
OSK Group/DMG                -6.0%     ---       ---      ---
Oxford Economics             -1.1%     0.0%      ---       380
Pierpont Securities          -6.6%     ---       ---       370
PineBridge Investments       -2.5%     0.0%      ---       380
PNC Bank                     -3.5%     0.5%      ---      ---
Raiffeisenbank International -6.5%     0.5%      ---      ---
Raymond James                -5.2%    -0.5%     -0.4%      375
RBC Capital Markets          -7.0%    -0.2%     -0.1%      380
Regions Financial            -5.6%     ---       ---      ---
Renaissance Macro Research   -5.0%     0.0%      ---       385
Scotiabank                   -5.0%     0.2%      ---       380
Societe Generale             -9.4%    -1.9%     -3.1%      385
Southern Polytechnic State    4.0%     ---       ---       365
Standard Chartered           -5.0%    -0.2%      ---       378
Stone & McCarthy Research    -1.6%     ---       ---       375
TD Securities                -3.6%     0.5%      0.6%      378
UBS                          -7.0%     0.0%      ---       375
UniCredit Research           -3.0%     ---       ---      ---
University of Maryland       -3.5%     ---       ---       375
Wells Fargo & Co.            -2.7%     0.7%      ---      ---
Westpac Banking Co.          -7.0%     ---       ---       385
Wrightson ICAP               -4.5%     ---       3.0%      375
================================================================

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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