U.S. Durable Goods Orders Increase on Aircraft Demand

Orders for U.S. durable goods rose in September by the most in three months as stronger demand for commercial and military aircraft outweighed a drop in business equipment.

Bookings for goods meant to last at least three years increased 3.7 percent after a revised 0.2 percent gain in August, the Commerce Department said today in Washington. The median forecast of 67 economists surveyed by Bloomberg called for a 2.3 percent advance. A gauge of demand for capital equipment slumped 1.1 percent, a sign companies pulled back ahead of the partial federal government shutdown.

“Investment spending has been really soft this year,” Joshua Dennerlein, an economist at Bank of America Corp. in New York, said before the report. “You’d expect to see rip-roaring investment because the groundwork is there, but you keep getting these uncertainty shocks, these policy shocks. People are going to hold off on investment because they’re not really sure.”

Stock-index futures were little changed after the figures, with the contract on the Standard & Poor’s 500 Index expiring in December falling less than 0.1 percent to 1,748.1 at 8:35 a.m. in New York.

Faster growth in manufacturing, which accounts for about 12 percent of the economy, depends on how quickly confidence is restored in the aftermath of a budget battle that shut down the government for half of this month. Results from Ford Motor Co. and Whirlpool Corp. show stronger domestic auto and housing markets remain sources of strength for the expansion.

Minus Transportation

Orders excluding transportation equipment, where demand is often volatile month to month, fell 0.1 percent after a 0.4 percent decrease in August.

Forecasts for total durable goods orders in the Bloomberg survey of economists ranged from a 0.3 percent decline to a 7.5 percent increase after a previously reported 0.1 percent advance in August.

Demand for non-defense capital goods excluding aircraft decreased in September after a 0.4 percent gain in August and a 3.5 percent slump in July. Such orders are considered a proxy for future business investment in computers, electronics and other equipment.

Shipments of those products, a measure used to calculate gross domestic product, fell 0.2 percent in September after rising 1.1 percent the prior month. Sales were down 2.9 percent over the past three months at an annualized rate, compared with a 0.9 percent decline at the end of the second quarter.

Caterpillar Forecast

Caterpillar Inc., the biggest maker of construction and mining equipment, cut its 2013 sales and profit forecast this week after a slump in orders from commodity producers.

“There are encouraging signs, but there is also a good deal of uncertainty worldwide as we look ahead to 2014,” Chairman and Chief Executive Officer Doug Oberhelman said in a statement.

Today’s report showed bookings for commercial aircraft increased 57.5 percent in September after a 5.4 percent gain. Chicago-based Boeing Co. said it received 127 aircraft orders in September, up from 16 the previous month.

Orders for military aircraft and parts rose 15.2 percent after an 11.5 percent decrease, today’s report showed.

Demand for motor vehicles has also been a bright spot for manufacturers, with cars and light trucks selling at a 15.2 million annualized rate in September after climbing in August to the fastest annualized pace since 2007, figures from Ward’s Automotive Group showed.

Motor Vehicles

“The vehicle fleet has aged, so really vehicle assembly has nowhere to go but up,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, adding that Boeing, the world’s largest planemaker, is also looking at “a bottomless pit of orders.”

Ford earned a $2.3 billion profit in North America in the third quarter and raised its forecasts for pretax profit and operating margin for the full year. The Dearborn, Michigan-based company said yesterday its automotive sales rose 12 percent to $33.9 billion. It also earned a rare profit on overseas operations on rising demand for Focus compact cars in China and B-Max vans in Europe.

Benton Harbor, Michigan-based Whirlpool is also seeing signs of stronger demand in some parts of the world, while progress in the U.S. housing market boosts demand for its washers and dryers.

“In North America, we are increasing our industry demand assumption to approximately 9 percent for the year as we continue to see positive trends in U.S. housing,” Chief Executive Officer Jeff Fettig said on an Oct. 22 earnings call. In Latin America, “we’re now seeing a pickup in demand and we expect that positive trend to continue during the fourth quarter.”

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