U.S. durable goods likely to have risen in October on sharp rise in aircraft orders

U.S. durable goods are expected to have increased in October on sharp rise in aircraft orders. According to a Societe Generale research report, the headline durables goods are likely to have grown 2.5 percent in October. Boeing has recorded 85 new orders in October, with the value of the orders increasing sharply by 282 percent, as compared with September. This indicates towards a sharp increase in the value of non-defence aircraft in the durable reports. This series is likely to have risen by around 65 percent in October.

However, 21 of those orders were registered late in the month, and thus it is uncertain whether they were included in the October durables survey. This gives certain risk on the downside to the forecast. In any case, orders, excluding transportation, are expected to have dropped 0.2 percent with declines in fabricated metals, furniture, and computers and electronics.

In the meantime, non-defence capital goods orders rose 2 percent combined from May to August; however, they declined 1.3 percent in September. In general, orders are expected to have been held back due to uncertainty that surrounded the election.

“We look for non-defense capital goods orders excluding aircraft to have fallen by 2.5 percent, which would mark the heftiest drop since December 2015. Given that this series is a proxy for business investment, it would bode ill for that GDP category to start Q4”, added Societe Generale.