Orders for long-lasting factory goods increased for the fifth consecutive month in September, according to Commerce Department data released on Tuesday. New orders for durable goods rose 1.9% in September compared with August, with new orders for nondefense capital goods excluding aircraft and parts — a closely watched proxy for business investment — increasing by 1%. Data for August was also revised higher to show core capital goods orders increasing 2.1% instead of 1.9% as previously estimated.
The increase in durable goods orders was driven by a 4.1% rebound in orders for transportation equipment, which followed a 0.9% decline in August. Orders for motor vehicles and parts recovered 1.5% after falling 4.1% in August, but there were no orders for civilian aircraft reported for the third straight month. Also, shipments of core capital goods gained 0.3% last month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement. Overall, the index has recovered all of the pandemic-related losses, signaling that businesses may be ramping up capacity in anticipation of growing demand.
September’s report follows the latest IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index, which also noted quicker expansions in output and new orders with October activity expanding at the fastest pace since early 2019. Both surveys suggest the manufacturing sector is rapidly recovering from the pandemic lows in April, with autos, electronics and communications equipment driving activity.
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