A report released by the Commerce Department on Thursday showed a steep drop in orders for transportation equipment contributed to a bigger than expected decrease in U.S. durable goods orders in the month of September.
The Commerce Department said durable goods orders tumbled by 1.1 percent in September after rising by a revised 0.3 percent in August.
Economists had expected durable goods orders to decline by 0.8 percent compared to the 0.2 percent uptick that had been reported for the previous month.
The steeper than expected drop in durable goods orders came as orders for transportation equipment plunged by 2.7 percent in September after inching up by 0.2 percent in August.
Orders for non-defense and aircraft led the way lower, plummeting by 11.8 percent in September following a 17.2 percent nosedive in the previous month.
Excluding the slump in orders for transportation equipment, durable goods orders dipped by 0.3 percent in September after climbing by 0.3 percent in August. Ex-transportation orders had expected to edge down by 0.2 percent.
The more modest drop in ex-transportation orders came as notable decreases in orders for fabricated metal products and computers and electronic products were partly offset by a rebound in orders for electrical equipment, appliances and components.
Meanwhile, the report said orders for non-defense capital goods, excluding aircraft, a key indicator of business spending, fell by 0.5 percent in September after sliding by 0.6 percent in August.
Shipments in the same category, which is the source data for equipment investment in GDP, decreased by 0.7 percent in September after coming in unchanged in the previous month.
“These soft data confirm that business investment momentum has faded amid elevated trade uncertainty and deteriorating global growth and is likely to provide virtually no support to GDP growth in H2,” said a note from economists at Oxford Economics.
The economists added, “And with business sentiment rapidly shifting toward a more cautious stance, we caution that risks to the investment outlook are tilted to the downside.”
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