US Durable Goods Orders Climb as Consumer Confidence Falls

U.S. durable goods orders climbed unexpectedly in August, per new government data.

The Commerce Department announced Wednesday (Sept. 27) that orders for these long-lasting goods rose 0.2% last month after a 5.6% drop, revised from 5.2%, in July.

A report by Reuters said economists polled by the news outlet had predicted a 0.5% drop in durable goods. Manufacturing, which makes up 11.1% of the economy, is muddling along as higher borrowing costs slow demand for goods.

The data also showed shipments of capital goods rebounding from last month, the report noted, a sign of resilient business investment and the economy as a whole in spite of continued high interest rates.

“While inflation and downward revisions to July data give a reality check to the report, strength everywhere else in the economy suggests third-quarter growth is on solid footing regardless of tepid equipment spending,” Will Compernolle, macro strategist at FHN Financial in New York, told Reuters.

Consumers, however, are less enthusiastic about the economic picture, as PYMNTS wrote earlier this week.

“The negative sentiment about the money that’s hitting their accounts each pay cycle may in turn prove a negative read-across for merchants and other firms dependent upon individuals’ and households’ resilience,” that report said, after the Consumer Confidence Index from The Conference Board declined, reaching levels that signal a recession.

The board’s Expectations Index — which measures the short-term outlook for income, business and labor markets — fell to 73.7 in September, down from 83.3 in August. Once the reading dips below 80, a recession is likely within 12 months.

In a statement, The Conference Board Chief Economist Dana Peterson noted September’s “disappointing headline number” and added that consumers have shown concerns about “higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

And as noted here Wednesday, this situation may make things tougher for retailers heading into the annual shopping season.

“Simply put, there’s not enough money in the till, so to speak, to flat-out splurge,” PYMNTS wrote. “Consumers may pursue a number of strategies to tick off the boxes, to make sure that everyone on the proverbial list is represented. That means using credit, of course — where that is possible. Elsewhere, consumers may wind up trading down, or trading off, to ensure gift giving proceeds apace — call it, perhaps, a case of quantity outweighing quality.”