Capex spending intact as durable goods orders surge
|Orders for durable goods were above consensus estimates. Although aircraft orders lifted the headline figure, underlying details were strong as well with core orders up more than expected.
Orders Data Stronger than Expected
Durable goods orders rose 1.9% in September, handily exceeding the 0.5% consensus estimate. Core orders, that exclude volatile components like aircraft and defense spending, also rose 1.0%.
Consumer durables spending is helping to drive the strength in orders. Auto dealers have been faring reasonably well in recent months, and today's report shows both orders and shipments for vehicles and parts up 1.5% and 1.6%, respectively, in September.
Shipment Weaker, but Spending Plans Firming
Core capital goods shipments rose less than expected in September thus ending the third quarter on a soft note; that bodes poorly for Q4 equipment spending. The solid core orders numbers suggest that the softness in shipments may be short-lived.
Investment plans are on the upswing and there may arguably be some pent-up demand for capex since equipment spending peaked a full year before the pandemic.
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