The number of new orders for manufactured durable goods in October remained relatively unchanged compared to the previous month, according to the advanced report released by the U.S. Department of Commerce.
New orders for manufactured durable goods in October totaled $216.9 billion, a 1.7 percent increase following a 9.2 increase in orders for September. Excluding transportation, new orders increased 1.5 percent; excluding defense, they increased 0.1 percent. New orders numbers were up five of the last six months.
Machinery orders represented the largest increase, at a 2.9 percent increase.
According to Reuters, economists had expected “core capital goods” orders, including all non-defense and non-aircraft goods, to fall 0.5 percent. Experts noted that although the numbers were higher than expected, they did not represent a clear indicator of continued productivity.
“It looks like the manufacturing sector was not quite as weak in October as economists thought,” Gary Thayer, chief macro strategist for Wells Fargo Advisors, told Reuters. “Inventories, however, rose relative to shipments, which suggests growth in orders may still be relatively modest going forward. Outside of the transportation sector, we’re seeing decent levels of orders, which suggests the economy is still healthy, but not strong.”
Hugh Johnson, chief investment officer of Hugh Johnson Advisors, echoed this sentiment, noting that the numbers were encouraging, but not enough to overcome other worries.
“On balance, you would have to look at this number and say it is encouraging,” he told Reuters. “It is one piece of a many-piece puzzle, but a good piece. For those of us that are worried about the economy in 2013 given the uncertainty of the fiscal cliff, this is a little bit helpful. But that doesn’t remove the overarching worry about the cliff or that tax policy and spending policy will not be right given the weak economy.”
Durable goods orders are a leading indicator of manufacturing business, as an increase in orders is generally a sign of increased production. Experts are careful to note that durable goods orders can be erratic, as defense and transportation goods, typically high-ticket items, are ordered irregularly and can warp the figures.
Some experts have supposed machine tool orders, which are included in durable goods figures, were up in September due to the “IMTS effect.”