US economy

Durable goods orders slump by the most in 15-months in October


A key US manufacturing gauge slumped by the most in 15 months in October amid a sharp drop in demand for transportation equipment. However underlying data continue to point to strength in the American economy despite the uncertainty over Washington’s trade war with Beijing.

Orders for long-lasting US goods fell 4.4 per cent in October from September, according to the US commerce department. The fall was far steeper than the 2.6 per cent decline forecast by economists and is the biggest one month decline since July 2017.

The drop was led by a $11.7bn, or 12.2 per cent drop in transportation orders to $84.7bn. Stripping out the volatile transport category, orders were up by 0.1 per cent last month, albeit still falling short of expectations for a 0.4 per cent gain.

Orders for non-defence capital goods excluding aircraft, which are seen as a proxy for business investment, were unchanged at $69bn following two straight months of decline.

“The limited visibility on trade spats with China and others is slowing capital spending decisions and thus offsetting the impact of the tax incentive to increase capital expenditures,” noted Peter Boockvar, chief investment officer at Bleakley Advisory Group.

The data come as various members of the Federal Reserve continue to paint an upbeat picture of America’s economic outlook. The US central bank is widely expected to raise interest rates again in December and push ahead with another three rate rises in 2019.

The dollar held on to its losses after the release of the data. Treasuries rallied slightly. Yield on the benchmark 10-year note, which moves in opposite direction to price, was up 1.7 basis points at 3.0646 per cent. It had traded as high as 3.088 per cent prior.



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