Surge in aircraft contracts leads way, but business investment softens
A snapback in contracts for Boeing jets increased U.S. orders for durable goods in September, however business investment softened again and underscored the failure of the U.S. economy to leap onto a faster-growth plane.
Orders for durable goods advanced 3.7% in September, led by a 57.5% increase in aircraft bookings, the Commerce Department said Friday. Compared with just 16 in August, Boeing BA -0.43%signed contracts last month for 127 jetliners, rmirroring a usually irregular pattern of orders in the airline industry.
Economists polled by MarketWatch had forecast a seasonally adjusted 3.0% increase in new orders.
In U.S. markets, stocks went up a little as investors paid attention mainly on strong corporate earnings reports.
The other major component of transportation are Autos, these things did not fare as well. In August, bookings for autos and auto parts fell 0.3% after a strong increase.
Revealing the unstable transportation sector, new orders dipped 0.1% in September to mark the third straight turn down, possibly a sign that manufacturers grew watchful in expectation of the government shutdown. Demand went down for heavy machinery declined 1.8%.
“Everything else remained lackluster as it has for months,” said Michael Montgomery, U.S. economist at IHS Global Insight.
In addition, in September, orders for capital goods exclusive of military wares and commercial aircraft slipped 1.1%. That’s the second go down in three months for a category viewed by economists as a proxy for business investment.
The mild pace of business investment is a troubling sign, some economists and industry experts say. Many companies must improve investment just to trade equipment that’s tiring out and the ultralow level of interest rates would propose that they should act now.
“Business equipment spending should be driving U.S. economic growth,” said Daniel Meckstroth, chief economist of the Manufacturers Alliance for Productivity and Innovation. “Interest rates are the lowest in more than a half-century and banks are showing a willingness to expand lending to business. What is missing is the confidence that economic growth will accelerate and that there will be profitable business opportunities in this country.”
The government shutdown in October may have compounded the problem and the trouble-plagued rollout of the new health care law commonly known as Obamacare could also be undermining confidence, economists say.
Shipments of core capital goods, edged down 0.2% in September a number used to help determine how fast the economy grows. Shipments cut down in two of the three months of the third quarter.
Durable-goods orders in August, in the meantime, were revised a little to show a 0.2% boost.
Orders for durable goods have risen 3% compared the same period a year earlier In the first nine months of 2013. Core orders are up mild 4.3% in the same span.