2017.11.2209:23:00UTC+00U.S. Durable Goods Orders Unexpectedly Pull Back 1.2% In October

Reflecting a sharp pullback in orders for transportation equipment, the Commerce Department released a report on Wednesday showing an unexpected drop in new orders for U.S. manufactured durable goods in the month of October.

The Commerce Department said durable goods orders tumbled by 1.2 percent in October after surging up by an upwardly revised 2.2 percent in September.

The decrease surprised economists, who had expected orders to edge up by 0.3 percent compared to the 2.0 percent increase that had been reported for the previous month.

The unexpected decline was largely due to the pullback in orders for transportation equipment, which slumped by 4.3 percent in October after spiking by 4.4 percent in September.

Orders for non-defense aircraft and parts showed a substantial decrease, plunging by 18.6 percent in October after soaring by 33.9 percent in September.

Excluding the drop in orders for transportation equipment, durable goods orders rose by 0.4 percent in October after jumping by 1.1 percent in September. Ex-transportation orders had been expected to climb by 0.5 percent.

The increase in ex-transportation orders was partly due to a rebound in orders for primary metals, which surged up by 1.3 percent in October after falling by 0.5 percent in the previous month.

The report also showed increases in orders for electrical equipment, appliances, and components, machinery and computers and electronics products.

Meanwhile, the Commerce Department said orders for non-defense capital goods excluding aircraft, an indicator of business spending, fell by 0.5 percent in October after shooting up by 2.1 percent in September.

Andrew Hunter, U.S. economist at Capital Economics, said the drop is the first sign that the rapid pace of business equipment investment growth may eventually start to ease back.