Geopolitical uncertainties hurt durable goods orders

November 27, 2024

October durable goods orders rose 0.2%, slightly below the market consensus of 0.5%. The fall in September orders was cut to 0.4% from -0.8%.

Civilian aircraft orders rebounded in October, rising 8.3% from -16.6% in September. Defense aircraft orders posted a gain of 16.6% after a decline of 23% the month before. That contributed to a positive 0.5% growth in transportation and equipment orders following two months of declines. Orders for motor vehicles and parts declined -0.4% in October, reversing a gain of 0.7% the month before. Excluding transportation, durable goods orders rose by a tepid 0.1%.

Results in other industries in October came in mixed. Computers and related product orders declined -2.5%. Primary metals orders fell 0.7%. On the bright side, communications equipment and electrical equipment, appliances and components increased 1.3%.

A good proxy for business spending plans, capital goods orders excluding defense and aircraft, dropped by -0.2% in October.

The S&P Global purchasing managers' index (PMI) flattened out in November to 48.8. Readings below 50 signal contractionary conditions. This is the fifth straight month of readings below 50.

In the durable goods report, nondefense capital goods shipments excluding aircraft, a proxy for nonresidential investment, rose 0.2% in October after declining 0.1% in September and August.