INDICATOR: September Durable Goods Orders
KEY DATA: Orders: up 3.7%; Excluding Aircraft: up 0.3%; Capital Spending: -1.1%; Backlogs (Non-Aircraft): up 0.2%
IN A NUTSHELL: "Businesses took the logical step of becoming more cautious in face of the looming government chaos and durable goods demand rose modestly."
WHAT IT MEANS: With Washington about to implode and possibly take the economy with it, what would you do if you had to make a decision concerning purchasing big-ticket items? Exactly. You would decide that it might not matter if the order was held for a month or two. Durable goods order soared in September but only because of huge increases in both defense and non-defense (Boeing) aircraft demand. Otherwise, purchases of major items rose much more modestly. Still, there was some positive news in the report. Orders for computers, communications equipment and primary metals were up strongly. Though vehicle orders eased, that came after large rise in August. That modest pullback indicates that the sector seems to be continuing its rebound. On the other hand, orders for things such as appliances, electrical equipment, machinery and fabricated metals fell. Also, the best measure of private sector investment spending, capital goods orders excluding both aircraft and defense demand, was off sharply. This is a volatile segment but it seems to be on a downward slide and that is not good news for the economy. Order books continued to grow and that should lead to more production going forward.