Orders for U.S. business equipment such as machinery and electrical gear unexpectedly declined in October, a sign that recent increases in corporate investment may not persist.
Bookings for non-military capital goods excluding aircraft fell 1.3% for a second straight month, the Commerce Department said today in Washington. Economists projected a 1% gain, according to the Bloomberg survey median. Orders for all durable goods -- items meant to last at least three years -- rose 0.4% on a jump in demand for military aircraft.
An inconsistent pattern of investment in equipment shows companies are waiting to see if demand is sustained as global markets struggle to improve. At the same time, spending by American households will probably hold up and underpin manufacturing as the job market strengthens and gasoline prices continue to fall.
“There might be a little more caution with investment if a lot of your growth is coming from abroad,” said Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York. Still, “we’re not concerned about durable goods orders completely falling off a cliff, but some slowdown here is to be expected.”
Bookings declined last month for metals, machines, computers and electrical equipment, today’s figures showed. Demand for motor vehicles rebounded.
The last time orders declined in consecutive months for non-military capital goods excluding aircraft, which are considered a proxy for future business investment, was April and May.
Excluding transportation equipment, which is often volatile from month to month, total bookings dropped 0.9%, the most this year, today’s data showed.
Demand for non-defense goods decreased 0.6% after a 1.2% slump. Orders for military aircraft surged 45.3% in October.
The median forecast of 79 economists surveyed by Bloomberg called for a 0.6% drop in total durable goods orders. September was revised to a 0.9% decrease, previously reported down 1.1%. Estimates ranged from a 3% decline to a 3% gain.
The durable goods data also reflected a 0.1% decrease in bookings for civilian aircraft, according to the Commerce Department’s report. Boeing Co., the Chicago-based aerospace company, said it received 46 orders last month after 122 in September.
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