DJ DATA SNAP: Durable Goods Orders Below Expectations
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Oct Durable Goods Orders: Oct Sep ! Consensus: !
Total Orders: -8.3% +8.7%r ! -5.0% !
Ex-Transportation: -1.7% +0.5%r ! Actual: !
Ex-Defense: -6.4% +7.4%r ! -8.3% !
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By Jeff Bater
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Durable-goods orders reversed course and took their sharpest fall in six years during October, dragged down by lower demand for airplanes and capital goods.
Durable-goods orders decreased by 8.3% last month to a seasonally adjusted $209.97 billion, the Commerce Department said Tuesday. Durables had jumped by 8.7% in September, revised from a previous estimated 8.3% increase.
Durables were flat during August and down by 2.8% in July.
A key barometer of business equipment spending - orders for non-defense capital goods excluding aircraft - decreased by 5.1%, after rising 3.2% in September. Shipments for non-defense capital goods excluding aircraft decreased by 1.5%, after dropping by 1.6% in September; the shipments are used in calculating gross domestic product.
The 8.3% decline in overall durable goods orders surprised Wall Street. The median estimate of 23 economists surveyed by Dow Jones Newswires had durables 5.0% lower during October. It was the biggest drop since 14.0% in July 2000.
Other, recent data have indicated slowing growth in manufacturing. The Institute for Supply Management, a private research group, said its index of manufacturing activity slowed to 51.2 in October, from 52.9 in September and 54.5 in August. The reading was the weakest since June 2003.
The Federal Reserve reported U.S. industrial production rose less than expected, up 0.2% last month. The Fed report showed manufacturing output, which accounts for about four-fifths of total U.S. industrial production, decreased by 0.2%.
Commerce on Tuesday reported transportation orders decreased 21.7% in October, after rising 29.9% in September. Orders for commercial planes tumbled 44.5%, while military aircraft orders rose 19.2%. Motor vehicles and parts increased by 1.4% last month.
Orders for all durables except transportation goods decreased 1.7%, after rising 0.5% in September. Demand decreased 2.5% for fabricated metals and 10.2% for computers and electronics. Orders increased 1.1% for primary metals, 5.1% for electrical equipment, and 1.4% for machinery.
Capital goods orders declined by 19.2% last month. Non-defense capital goods - items meant to last 10 years or longer - fell 15.6%. Defense-related capital goods orders tumbled by 42.1% - the largest decrease since 49.3% in October 2002.
Orders for everything except defense goods dropped 6.4% in October, after going 7.4% higher in September.
Durable-goods inventories of manufacturers increased 0.8% last month. Unfilled orders climbed by 1.2%, and shipments rose by 0.6%.
-By Jeff Bater, Dow Jones Newswires; 202-862-6616; jeff.bater@dowjones.com
(END) Dow Jones Newswires
11-28-06 0830ET
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