Durable Goods Order Decline Steepest In 15 Months

Orders for durable goods in the U.S. declined the most in 15 months in October as demand for transportation equipment suffered a sharp decline, the Financial Times reported.

According to a report in the Financial Times, at the same time that durable goods declined, the underlying data points to a continuation of the strong economy in the U.S.

Citing the U.S. Commerce Department, the Financial Times reported orders for long-lasting goods in the U.S. declined 4.4 percent in October from September, which was bigger than the 2.6 percent decline economists were expecting. Its also the largest one-month decline since July of 2017.

Excluding the transport category, orders were up 0.1 percent in October, which was lower than the 0.4 percent gain economists were looking for.  The report noted that orders for capital goods that didn’t have to do with defense such as aircraft were unchanged coming off two months of declines. The non-defense capital goods are used as a proxy for business investments, noted the report. “The limited visibility on trade spats with China and others is slowing capital spending decisions and thus offsetting the impact of the tax incentive to increase capital expenditures,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in the report.

While the report is sure to spook some investors, the data does come at a time when the Federal Reserve in the U.S. remains upbeat about the economic prospects for the U.S. According to the Financial Times, the Federal Reserve is expected to increase interest rates again in December, and raise rates three times next year. The Fed wouldn’t be in rate-raising mode if they saw signs of a slow down in the U.S. economy. After the release of the data, the FT noted the dollar held on to its losses while Treasuries rallied somewhat.