US Q4 GDP tracking 2.1% after October factory orders

Total factory orders rose 1.5 m/m in October, close to forecast and consensus expectations of a 1.4% gain. October orders for durable goods were revised down a touch, to 2.9% m/m (initial: 3.0%), and continue to reflect the effects of a large surge in nondefense aircraft orders.

 Orders for nondurable goods were flat on the month (previous: -0.9%), against expectations of a small decline. Core capital goods for October were unrevised at +1.3% m/m (previous: 0.5%), while shipments now show a slightly larger monthly decline (-0.5% m/m, initial: -0.4%) due to an upward revision to September data.

On the inventories side of the report, manufacturer's inventories of durable goods were revised modestly higher in October, and nondurable inventories came in above expectations (+0.2% m/m, previous: -0.4%). The data left the tracking estimate of equipment investment nearly unchanged and boosted our expectation of Q4 inventory investment modestly.

"We continue to expect equipment investment growth to moderate in Q4 following the 9.5% annualized gain reported for Q4. The upward revision to our Q4 inventory expectation boosted our GDP tracking estimate one-tenth, to 2.1%", says Barclays.