US Q3 GDP tracking 1.4% after September factory orders

Total factory orders fell 1.0% m/m in September, close to consensus expectations (-0.9%) and modestly above our forecast (-1.3%), as August figures were revised lower (-2.1% m/m, previous: -1.7%). Orders for nondurable goods (-0.8% m/m, previous: -1.3%) fell less than expected on the month, with petroleum and coal products responsible for most of the decline.

Headline durable goods orders were unrevised for September at -1.2% m/m; however, the profile for core capital goods demand was revised up modestly for the previous two months. August core capital goods orders are now reported at -1.4% m/m (initial: -1.6%) and September was revised up to -0.1% m/m (initial: -0.3%). Shipments of core capital goods were unrevised at -0.8% m/m in August and +0.5% m/m in September.

This morning's report also provides the first estimate of manufacturers' inventories of nondurable goods. This series was down 0.4% m/m in September and revised lower to -0.7% m/m in August (initial: -0.6%). Given the relatively small revisions to durable goods data, this morning's report provides little new signal on the state of US manufacturing. Demand for many categories of manufactured goods continues to struggle from the effect of a stronger dollar, weak foreign demand and lower energy prices.

"Downward revisions to inventories, both for durable and nondurable goods, suggest a slightly larger drag from inventories than was reported in the advance estimate of Q3 GDP. After rounding, our Q3 GDP tracking estimate fell one-tenth to 1.4%",says Barclays.