By Utta Von Nuremburg
WASHINGTON (MNI) – Thursday’s advance report on durable goods
orders from the Commerce Department is expected to post another weak
reading, pointing to a continued slowdown in U.S. factory activity.
According to a survey of economists by Market News International,
new orders for U.S. manufactured goods are expected to have declined by
1% over the month of November. This would follow the unexpected 3.4%
drop in October, the largest decline since January 2009 that was much
worse than expectations. Prior to that had been a 4.9% jump.
“We can expect to see a weak headline number but stronger detail”,
Jim O’Sullivan, global chief economist at MF Global, said during a
telephone interview. MF Global is predicting a decline of 1.8% in
Thursday’s headline figure.
The drop in orders last month was driven by hefty declines in
machinery (-3.9%), computers and electronic products (-7.7%),
communications equipment (-12.3%) and defense aircraft (-25.1%).
Shipments in October also declined (-0.9%), indicating an elevated level
of inventories.
Other notable data from October includes a 4.4% decline in new
orders for non-defense aircraft and parts, which surged 112.6% in
September. Non-defense capital goods orders and non-defense capital
goods orders ex-aircraft — closely watched indicators for business
spending and future business investment — both dropped 4.5%, after
rising 11.7% and 1.9%, respectively.
Excluding transportation, new durable goods orders posted a loss of
2.7% in October, the largest decline since May 2009, after a revised
1.1% increase in September, likely signaling a slowdown in business
spending.
However, according to O’Sullivan, “orders outside of aircraft are
expected to show a solid rise, particularly, the capital goods
component.” MF Global is predicting a 2% increase in
Thursday’s core figure.
–Utta Von Nuremburg is a reporter with Need to Know News in Washington
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,M$U$$$]