US Durable Goods: Stability despite headline decline - Wells Fargo

Analysts from Wells Fargo, explained that  US durable goods orders fell 1.2% despite expectations for a modest increase in October and added that core capital goods orders slipped too, but did so on the heels of a significant upward revision to prior months data.

Key Quotes: 

“Both military and civilian orders for aircraft posted doubledigit percentage point declines in October which pulled overall durable goods into negative territory. Core capital goods orders also declined, slipping 0.5 percent, but there was a 0.4 percentage point upward revision to September. The trend in core orders remains quite positive with the fastest 3-month annualized rate in four years.”

“Shipments of core capital goods looked better than orders in today’s report. Our first hard data for the final quarter on this key proxy for equipment spending increased 0.4 percent, lifting the 3-month annualized rate to 13.1 percent.”

“Inventories have boosted growth in four of the past five quarters. A slowing in inventory building could eventually weigh on growth. For now, though, inventories of durable goods are rising.”