Orders in U.S. Probably Rose After Biggest Plunge in Three Years

Orders for U.S. durable goods probably rose in September following the biggest plunge in three years as demand for airplanes rebounded, economists said before a report today.

The projected 7.5 percent gain in bookings for goods meant to last at least three years would fail to make up for a 13.2 percent slump in August that was the biggest since January 2009, according to the median forecast of 77 economists surveyed by Bloomberg. A less volatile measure that excludes transportation equipment may have advanced 0.9 percent after falling a combined 5.1 percent over the previous three months.

Companies from Caterpillar Inc. (CAT) to Advanced Micro Devices Inc. (AMD) have tempered sales projections, raising the risk that cuts in business spending ahead of looming tax and government- spending changes will hold back the economy. In addition, exports to Europe and Asia are waning as global growth cools, further hindering American manufacturers.

“The headwinds are causing businesses to become cautious,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “Capital spending will be soft in the near term. We’re not going to get a lot of help from exports.”

The Commerce Department’s durable-goods report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gains of 0.3 percent to 14 percent.

Fewer Claims

Also at 8:30 a.m., Labor Department data may show claims for jobless benefits fell by 18,000 to 370,000 last week, according to the Bloomberg survey median. Stripping away the ups and downs caused by difficulty in adjusting the data for swings at the start of a quarter, the level of firings has been little changed the past few months, indicating the labor market is slow to heal.

A separate report at 10 a.m. may show housing is improving. The National Association of Realtors’ index of pending home sales rose 2.5 percent last month after a 2.6 percent drop in August, economists in the Bloomberg survey projected.

Federal Reserve policy makers yesterday said the economy is still growing modestly and unemployment remains elevated as it maintained $40 billion in monthly purchases of mortgage-backed securities aimed at spurring the three-year expansion.

The slowdown in business investment was among the developments the central bank highlighted in discussing the current state of the economy.

Boeing Co., the world’s largest aerospace company, received orders for 143 airplanes in September, up from one the prior month and 260 in July.

Less Demand

Other manufacturers are acknowledging a slowdown. Advanced Micro Devices, the second-largest maker of processors for personal computers, on Oct. 18 forecast fourth-quarter sales that will miss analysts’ estimates and said it will cut staff by 15 percent. General Electric Co. (GE), Parker Hannifin Corp. (PH), and Honeywell International Inc. (HON) are among the industrial companies that have also said they’ve been hurt by weak demand.

Caterpillar, the world’s largest maker of construction and mining equipment, this week projected sales growth for 2013 that would be slower than in the previous three years as the global economy decelerates. Production across much of the company has been reduced, with temporary shutdowns and dismissals to help work through excess stockpiles, it said.

“We’re already taking actions to lower production to deal with the inventory and we’re ready to do more if we need to,” Michael DeWalt, director of investor relations at Peoria, Illinois-based Caterpillar, said on an Oct. 22 conference call. “We’re not banking on a big pickup in the economy.”

Shares Drop

The Standard & Poor’s Supercomposite Machinery Index (S15MACH), which includes companies like Deere & Co., has fallen 6 percent from its 2012 peak reached in mid-September, while the broader S&P 500 gauge has declined 3.9 percent over the same period.

Factories may remain under pressure heading toward the more than $600 billion in tax increases and federal spending cuts that take effect early next year unless Congress acts to forestall them.

Capital spending is “substantially more sensitive to policy uncertainty shocks than other areas” of the economy, Goldman Sachs Group Inc. economists led by Jan Hatzius said in an Oct. 19 research note.

Some of the damage is already visible. The capital spending outlook as measured by the monthly Philadelphia and New York Fed business surveys have fallen to levels only seen in, or just prior to, recessions in recent years, they said.

Demand for automobiles remains a bright spot for manufacturing. Cars and light trucks sold at a 14.9 million annual pace in September, the most since March 2008, according to Ward’s Automotive Group data.

                        Bloomberg Survey

================================================================
                          Durables Durables  Initial  Pending
                            Orders Ex-Trans   Claims    Homes
                              MOM%     MOM%   ,000’s     MOM%
================================================================
Date of Release              10/25    10/25    10/25    10/25
Observation Period           Sept.    Sept.   20-Oct    Sept.
----------------------------------------------------------------
Median                        7.5%     0.9%      370     2.5%
Average                       7.3%     0.9%      370     2.4%
High Forecast                14.0%     3.0%      382     4.0%
Low Forecast                  0.3%     0.1%      350     0.5%
Number of Participants          77       51       46       33
Previous                    -13.2%    -1.6%      388    -2.7%
----------------------------------------------------------------
4CAST                         8.5%     1.0%      365     4.0%
ABN Amro                      7.0%     ---       370     2.0%
Action Economics              8.5%     0.5%      382     ---
Ameriprise Financial          8.8%     0.3%      370     1.8%
Bank of the West              7.0%     0.6%     ---      1.8%
Bantleon Bank AG              6.3%     0.9%     ---      ---
Barclays                      7.2%     1.7%      365     1.5%
Bayerische Landesbank         7.3%     0.3%     ---      ---
BBVA                          5.5%     1.2%      372     ---
BMO Capital Markets           7.0%     0.5%     ---      2.0%
BNP Paribas                   4.9%     0.1%      365     2.5%
BofA Merrill Lynch            6.3%     0.9%     ---      ---
Briefing.com                 12.0%     0.2%      375     1.0%
Capital Economics             8.5%     1.0%     ---      3.0%
CIBC World Markets            9.7%     1.1%     ---      ---
Citi                         10.0%     1.9%      375     ---
ClearView Economics           6.5%     ---      ---      1.5%
Comerica                     11.0%     ---      ---      ---
Commerzbank AG                9.0%     0.8%      375     2.0%
Credit Agricole CIB          11.0%     1.5%     ---      ---
Credit Suisse                 6.5%     1.0%     ---      ---
Daiwa Securities America      5.0%     ---      ---      ---
Danske Bank                   6.9%     ---      ---      2.7%
DekaBank                      7.5%     1.3%     ---      ---
Desjardins Group              9.8%     ---       370     ---
Deutsche Bank Securities      5.0%     1.0%     ---      3.0%
Deutsche Postbank AG          8.0%     1.0%     ---      ---
Exane                         7.8%     1.8%     ---      ---
First Trust Advisors          9.2%     1.2%      372     ---
FTN Financial                 8.0%     0.4%     ---      ---
Goldman, Sachs & Co.          6.0%     ---      ---      ---
Helaba                        7.0%     ---       370     ---
High Frequency Economics      9.0%     2.0%      365     3.0%
HSBC Markets                  8.2%     0.4%      365     3.0%
Hugh Johnson Advisors         6.0%     ---       375     ---
IDEAglobal                    5.0%     0.5%      375     2.0%
IHS Global Insight           10.5%     ---      ---      ---
Informa Global Markets        6.2%     ---       380     2.1%
ING Financial Markets         8.0%     1.2%      365     2.8%
Insight Economics             8.0%     ---       375     ---
Intesa Sanpaulo               6.5%     0.5%     ---      ---
J.P. Morgan Chase             9.0%     2.0%      370     2.5%
Janney Montgomery Scott      12.1%     1.0%     ---      0.9%
Jefferies & Co.               6.5%     ---       365     ---
John Hancock Financial        1.5%     ---       369     ---
Landesbank Berlin            12.9%     1.8%      365     ---
Lloyds Bank                   8.0%     ---       375     ---
Maria Fiorini Ramirez         ---      ---       365     ---
Market Securities             9.0%     ---      ---      2.8%
MET Capital Advisors          1.0%     ---      ---      ---
Mizuho Securities             8.0%     0.8%      380     1.0%
Moody’s Analytics             7.5%     1.2%      373     3.5%
Morgan Stanley & Co.          9.5%     ---       365     ---
National Bank Financial       8.4%     1.1%     ---      ---
Natixis                       2.5%     0.5%     ---      ---
Nomura Securities             3.5%     0.7%     ---      ---
Nord/LB                       6.0%     0.8%      365     ---
OSK Group/DMG                 5.0%     ---      ---      ---
Oxford Economics              0.3%     0.4%      370     ---
Pierpont Securities           7.0%     ---       365     ---
PineBridge Investments        8.0%     0.5%      375     0.5%
PNC Bank                      3.5%     1.0%     ---      ---
Raiffeisenbank International  6.5%     0.5%     ---      ---
Raymond James                 6.8%     0.4%      364     2.5%
RBC Capital Markets           8.2%     0.3%      380     3.5%
RBS Securities                8.5%     ---       365     ---
Regions Financial             8.1%     ---      ---      ---
Renaissance Macro Research    6.5%     0.5%      375     1.0%
Scotiabank                    7.5%     0.5%      370     2.5%
Societe Generale              5.5%     1.4%      370     3.5%
Southern Polytechnic State   14.0%     3.0%      350     ---
Stone & McCarthy              6.0%     ---       375     ---
TD Securities                 8.0%     0.1%      360     3.5%
UBS                           8.0%     0.5%      370     3.0%
University of Maryland        7.0%     ---       380     ---
Wells Fargo & Co.             6.0%     1.0%     ---      ---
Westpac Banking Co.           6.0%     ---       375     4.0%
Wrightson ICAP                8.0%     ---       362     2.0%
================================================================

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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

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