Drop in Durable Goods Orders Seen as Bad Sign for Investment

Inside Baker Road Furniture For Durable Goods
Tim Boyle/Bloomberg via Getty Images
By Jason Lange

WASHINGTON -- New orders for long-lasting U.S. manufactured goods outside of transportation equipment fell in September in a possible sign companies were holding back on investments due to uncertainty over government spending.

A surge in volatile aircraft orders was the main factor pushing overall orders of durable goods to rise a more-than-expected 3.7 percent during the month, data from the Commerce Department showed Friday.

Durable goods include everything from toasters to tanks, and outside transportation equipment, new orders fell 0.1 percent during the month.

The data also showed orders of non-military capital goods other than aircraft, an indicator of business spending plans, fell 1.1 percent during the month.

The data suggests businesses may have scaled back investment plans as a political impasse in Washington threatened to lead the government to miss payments on its obligations, although firms also could be trimming these plans over more general doubts regarding the economy's strength.

The impasse was eventually resolved in October, though not before a partial government shutdown left hundreds of thousands of people out of work for weeks and also delayed the release of a slew of economic data.

Friday's report represents part of the catch-up effort in publishing a backlog of economic data, and the data included revised readings for durable goods orders in August.

The data also boded poorly for economic growth in the third quarter. Shipments of non-military capital goods other than aircraft fell 0.2 percent during the month. Shipments fell in two of the three months of the third quarter.

The reading for these so-called "core" shipments feeds directly into the government's estimates for total economic growth.


Increase your money and finance knowledge from home

Finding Stock Ideas

Learn to do your research and find investments.

View Course »

What is Short Selling?

Make a profit when stocks prices fall.

View Course »