U.S. Durable Goods Orders Jump 1.8% to $345.4 Billion in September
Key Facts
U.S. durable goods orders rose $6.3 billion, or 1.8%, to $345.4 billion in September, according to the U.S. Census Bureau. The increase followed a 0.1% rise in August, with orders recording gains in 6 of the past 7 months. Transportation equipment led the advance, while core capital goods data showed slower-than-expected growth. The reading was released on October 27, before the Federal Reserve's meeting concluded the following day. Markets are focused on the interest rate decision and the central bank's signals on the outlook for inflation and monetary policy.
Orders for transportation equipment increased $5.2 billion, or 4.6%, to $119.8 billion, making it the largest contributor to the rise in total orders, according to the Census Bureau. Excluding transportation, orders rose 0.5%, while they increased 2.2% excluding the defense sector. On a separate measure, orders for nondefense capital goods excluding aircraft rose 0.5% in September, following an unrevised 1.6% increase in August. Economists polled by Reuters had expected a 0.7% increase in this measure. The comparison indicates that the strength in total orders was not reflected to the same extent in the core capital goods measure investors track to assess business spending.
On the investment side, shipments of core capital goods jumped 1.2% in September, according to Reuters. These shipments feed into the equipment spending component of the gross domestic product report, making them an indicator of spending carried out alongside new orders. Reuters said business spending on equipment recorded two consecutive quarters of double-digit growth, driven largely by investment in artificial intelligence. Axios also reported that orders for computers and related products, including servers, storage units and peripherals, rose 27% year over year. The increase included growth of nearly 4% in September alone, signaling continued demand related to computing infrastructure.
The figures come ahead of the Fed's decision, after the central bank raised its target interest rate range by a quarter of a percentage point in September to 3.75%-4%, according to its statement. The statement described economic activity as "expanding at a solid pace" and said inflation "remains elevated," while reaffirming the committee's 2% goal. In a Reuters poll conducted between October 16 and 20, 94 of 100 economists expected rates to remain unchanged at the October meeting, while all 100 participants expected a hike in December. These are poll estimates, not an official central bank decision. The Associated Press said inflation came in above most economists' expectations for two consecutive months, and that investors would watch the Fed's statement language for signals about the next steps and the path of prices.
Attention will turn after the meeting to a batch of U.S. data due at the end of October. On October 29, the advance estimate of third-quarter gross domestic product and the September income and outlays report are due at 8:30 a.m. Eastern time, according to the Bureau of Economic Analysis schedule. The third-quarter Employment Cost Index is scheduled for release on October 30 at 08:30 a.m. Eastern time, according to the Bureau of Labor Statistics. These are upcoming release times at the time of writing, not published results. The forthcoming data will provide successive readings on growth, spending and employment costs as investors assess the monetary policy outlook.
Upcoming milestones include the release of the full September orders report on November 3, followed by the advance October orders report on November 25, according to the Census Bureau schedule. The Fed has also set November 18 as the release date for the minutes of its October 27 and 28 meeting. The committee's next meeting will be held on December 8 and 9. These dates place updates on orders, the meeting minutes and subsequent economic data within the ongoing tracking of interest rate and inflation decisions. In the gold market, EL7 data recorded the gold-to-dollar pair closing at $4,060.33 on October 27, then $4,039.605 on October 28.