Durable Goods surprise to upside

Durable Goods Orders in Oct were better than expected as the headline figure was unchanged with Sept, up 1.5% ex transports and higher by 1.7% in the non defense capital goods ex aircraft component vs expectations of down .7%, .5% and .5% respectively. Sept was revised down however but only by .3-.4%. Helping to keep orders positive were gains in electrical equipment, computers/electronics, machinery and metals. Vehicles/parts orders though fell 1.6% and are lower for a 3rd straight month. From a strict GDP perspective, overall Shipments fell .6% but the core level of shipments didn’t fall as much as expected. As inventories rose by .4%, the I/S ratio rose to 1.69 from 1.67, the highest since Oct ’09. Bottom line, after very sluggish growth in the previous 4 months, it’s good to see a rebound in durable goods orders in Oct in the search for stability but in the core cap ex component, orders are still down 7% y/o/y and lower by .1% y/o/y ex transportation orders, reflecting the recession in Europe, slowdown in Asia, and the lack of policy visibility in the US. From a market perspective, all eyes remain on DC.

Source: Barrons

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