Aircraft Demand Drop Triggers Downturn in US Durable Goods Orders

The U.S. Commerce Department on Wednesday (Nov. 24) released a report showing a surprise drop in new orders for durable goods manufactured in the country in October, with the decline in new orders for transportation equipment seen as the primary culprit.

Durable goods orders fell by 0.5% in October following a 0.4% drop in September, the Commerce Department’s report said. Economists had expected U.S. durable goods orders to rise by 0.2% in the month, according to a Nasdaq report.

Orders for transportation equipment dipped by 2.6% in October after falling 2.8% in September. That was led by orders for commercial aircraft and parts slumping 14.5% and orders for defense aircraft and parts slipping 21.8%.

Aside from transportation equipment, orders for durable goods were up 0.5% in October after a 0.7% uptick in September. That included “notable increases” in orders for primary metals and electrical equipment, appliances and components, according to the Commerce Department report.

Orders for non-defense capital goods — excluding aircraft-related products — were up 0.6% in October after a 1.3% hike in September. Non-defense capital goods are considered a key indicator of business spending, according to the Nasdaq report. Shipments in that segment — the source data for equipment investment in GDP — were up 0.3% in October following a 1.3% jump in September.

Related: Business Travel Unlikely to See 2019 Levels Again Until 2024 — If Ever

Global business travel spending dropped to $661 billion in 2020, down from $1.4 trillion in 2019, a 54% drop that was largely reflective of the spread of the COVID-19 pandemic across the U.S. and around the world throughout much of 2020 and well into 2021.

Meanwhile, the Global Business Travel Association’s latest business travel index, the BTI Outlook, sees 2021 business travel recovering “at a slower, more cautionary pace than expected from a year ago,” adding “global business travel spending is expected to surge in 2022 with full recovery expected in 2024.” Earlier this year, the association predicted the full recovery wouldn’t come until 2025.