A report released by the Commerce Department on Thursday showed new orders for U.S. manufactured durable goods increased by less than expected in the month of September.
The Commerce Department durable goods orders rose by 0.4 percent in September following a revised 0.2 percent uptick in August.
Economists had expected durable goods orders to increase by 0.6 percent in September compared to the 0.2 percent dip that had been reported for the previous month.
The increase in durable goods orders was partly due to a surge in orders for transportation equipment, which shot up by 2.1 percent in September after climbing by 0.6 percent in August.
Orders for non-defense aircraft and parts led the way higher, soaring by 21.9 percent in September after plummeting by 8.6 percent in August.
Excluding the jump in orders for transportation equipment, durable goods orders fell by 0.5 percent in September after coming in unchanged in August. Ex-transportation orders were expected to edge up by 0.2 percent.
The unexpected drop in ex-transportation orders reflected notable decreases in orders for communications equipment, primary metals and electrical equipment, appliances and components.
The report also showed orders for non-defense capital goods excluding aircraft, a key indicator of business spending, slid by 0.7 percent in September after climbing by 0.8 percent in August.
Shipments in the same category, which is the source data for equipment investment in GDP, fell by 0.5 percent in September after inching up by 0.2 percent in the previous month.
Core orders decreases for the first time since February 2022, while core shipments declined for the first time since February 2021.
“Looking ahead, a dwindling pipeline excluding the transportation sector will offer a minimal growth impulse for manufacturing activity heading into 2023,” said Kathy Bostjancic, Chief U.S. Economist at Oxford Economics.
She added, “The confluence of highly elevated inflation, higher interest rates, weakening demand, softening earnings growth and downbeat sentiment will cause durable goods activity to struggle next year.”
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