Durable Goods Orders Unexpectly Fell in September

American workers at a manufacturing plant for long-lasting durable goods. (PHOTO: REUTERS)

The Commerce Department reported Thursday orders for manufactured durable goods fell 0.1% in September, missing the median forecast for a rise of 0.1%. Excluding the transportation component, durable goods orders rose by 0.2%, meeting estimates.

The drop was largely fueled by weak demand for computers and electronic products, which will soften expectations for an acceleration in business spending in the fourth quarter. That will no doubt lead to lower gross domestic product (GDP) estimates.

Non-defense capital goods orders excluding aircraft, which is a closely watched proxy for business spending plans, fell 1.2% after three straight months of increases. The so-called core capital goods orders increased by an upwardly revised 1.2% in August.

The median forecast, which was derived from economists polled by Reuters, forecast core capital goods orders rising 0.3% after a previously reported 0.9% increase in August. While shipments of core capital goods rose 0.3% last month after remaining flat in August, business spending on equipment will likely remain weak in the third quarter.

How does that impact GDP? Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.