Orders for Durable Goods in Sept were better than expected. Orders ex transports rose 1.7%, above forecasts of up .4% and orders for Non defense goods ex aircraft were up 2.4% vs the estimate of up .5%. Aug was revised lower but not enough to offset the upside surprise in Sept. Shipments, which get directly plugged into GDP, fell by .7% after a scant .1% gain in Aug and 2.1% rise in July. Because inventories rose .1% in Sept, the inventory to shipments ratio did rise to 1.83, the highest since June ’09. Bottom line, cap ex spending was better than expected but a very important factor over the next few months is in play here and that is the expiration of the 100% accelerated depreciation opportunity for the purchase of new equipment that expires on Dec 31, 2011 (it will be 50% in 2012). We of course can’t quantify the extent that cap ex will be pulled forward into 2011 but have to assume there will be some
