Durable goods orders fell by 0.4% in September after a strong gain of 1.3% in August, driven by transportation orders—vehicles and nondefense aircrafts—which declined by 2.3% on the month, according to Commerce Department data released Wednesday.
Core capital goods orders—a proxy for future investment spending—rose by 0.8%.
But even with this decline in transportation orders, which tend to fluctuate, investment in the private sector remained strong, the data showed, suggesting continued robust growth.
Core capital goods orders—which exclude aircraft and defense and are a proxy for future investment spending—rose by 0.8% in September.
This increase was an upside surprise as early estimates pointed to a 0.5% increase. Capital goods orders overall decreased by 0.4%.
The increase marked the seventh straight increase in core capital goods orders since March. Such increases will continue to support elevated growth for the private investment component of gross domestic product in the coming months.
And when it came to delivering on orders, core capital goods shipments posted a strong 1.4% gain in September, following a 0.6% increase in August—which only feeds into the current quarter investment spending.
There were other signs of strength as well. Excluding transportation, new orders for durable goods rose by 0.4% compared to 0.3% in August as orders for defense aircraft and parts led the increase, posting a significant 104.3% gain on the month.
Overall inventories continued to increase at 0.9%, while the core inventories posted a slightly higher gain at 1.0% on the month.
Unfilled orders rose by 0.7%, easing from a 0.9% increase in August as demand for durable goods remained strong. As a result, the inventory-to-shipment ratio inched up to 1.8 compared to 1.79 in August.
The takeaway
New data on durable goods orders and shipments continue to point to robust private investment as the main anchor of economic growth in the second half of the year, despite the common fluctuation in transportation and defense durable goods.
