Demand for American-made products rebounded in October, according to a new report from the Census Bureau. Specifically, orders for U.S.-manufactured durable goods (items meant to last at least three years) jumped by 0.6 percent last month, significantly better than the 0.7 percent decline analysts anticipated. Year-over-year growth remains negative because it will take more than a single month to make up for the damage done by the trade war, slower global economic growth, the Boeing 737 MAX scandal, and various other issues.
However, the sharp rebound in October is a clear sign of just how fast activity can reaccelerate when trade tensions and other headwinds abate. In fact, “core” durable goods orders, which exclude the volatile transportation component, also rose by 0.6 percent in October, and orders for non-defense capital goods excluding aircraft, i.e. core capital expenditures, an important proxy for U.S. business investment, surged by 1.2 percent. The latter bodes well for fourth quarter gross domestic product growth, and the Federal Reserve Banks of Atlanta and New York, among others, likely raised their Q4 projections immediately after this morning’s positive data deluge. Speaking of GDP, the Q3 expansion was revised higher than expected this morning from 1.9 percent to 2.1 percent, resulting in the 10th consecutive quarter of economic growth of at least 2 percent.
Sources: Econoday, U.S. DoC, FRBSL