Durable Goods in U.S. Drop 1.3% During September
Orders to companies in the U.S. for long term manufactured goods dropped for the second straight month during September, while a critical category that signals the investment plans for business dropped by its biggest number in the past eight months.
However, analysts view the declines as only temporary, and believe they will be followed by a solid return to growth, powered by the expected upturn in spending by business on new equipment.
Orders retreated by 1.3% for durable goods during September after a tumble of 18.3% during August, said a report released on Tuesday by the U.S. Commerce Department.
The drop in August came after a record increase of 22.5% in July. The large swings in the two prior months were driven by the aircraft category that is highly volatile, which saw its orders in July soar, only to plummet to earth during August.
The aircraft, category, which serves as an outlook to investment by business has dropped by 1.7% during September, which was its largest drop since the first month of 2014.
Economists said that the drop came following a period of strong gains that pushed the category to new record levels.
Manufacturing is the cornerstone of the economy’s strength this year and the weakness of late is not considered to be worrisome or derail the momentum over the longer term.
Economists are still optimistic over the manufacturing outlook. They believe that businesses will continue growing as well as modernize operations as the consumer spending benefits from a job market that is strengthening.
Consumer spending account for more than 70% of the activity in the economy and that should offset any lackluster growth of exports from the U.S.
Despite increasing to record highs earlier in 2014, demand overseas might slow during the upcoming months, due to weakness in markets like Europe, as well as the U.S. dollar strengthening, which make goods from the U.S. less competitive abroad.
For September, weakness permeated many areas. Demand for goods dealing with transportation dropped by 3.7%, with commercial aircraft orders dropping 16%.
Demand for vehicles and parts dropped by 0.1%, while orders for machinery dropped by 2.8% while new computer demands fell by 5.3%.
The government is scheduled to release on Thursday its first overall estimate for economic growth during the third quarter.
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