Orders for long-lasting factory goods declined in October, a small setback for manufacturers experiencing solid growth in demand this year.
Orders for durable goods -- products designed to last at least three years, such as office furniture and computers -- decreased 1.2% from the prior month to a seasonally adjusted $236.0 billion in October, the U.S. Commerce Department said Wednesday. The fall follows a 2.2% increase in September.
Economists surveyed by The Wall Street Journal had expected a 0.2% increase for orders last month.
A closely watched proxy for business investment, new orders for nondefense capital goods excluding aircraft, dropped 0.5% in October. It was the largest drop in slightly over a year. The decline marks a divergence from previous months. The business investment measure increased 4.4% in the first 10 months of this year compared with the same period a year earlier.
October's capital goods decline is "the first sign that the rapid pace of business equipment investment growth may eventually start to ease back," said Andrew Hunter, economist with Capital Economics.
Still, business spending has been growing this year and "equipment investment looks to be on course for another strong gain in the fourth quarter," he said. That should keep the economy on pace to grow at between a 2.5% and 3.0% annual rate this quarter.
Orders for civilian aircraft declined 18.6% in October, and orders for defense capital goods dropped 9.6% from a month earlier. Both categories tend to be volatile. Orders for motor vehicles increased, potentially reflecting demand for cars after hurricanes Harvey and Irma earlier destroyed vehicles.
Excluding transportation, orders inched up 0.4% in October and have increased for four consecutive months.
Durable-goods data can be uneven from month to month, but the broader trend shows growth this year. Total durable-goods orders were up 4.9% in the first 10 months of 2017 compared with the same period a year earlier. That well outpaces the rate of inflation.
Manufacturing data has recently signaled a positive growth trajectory for the overall economy, driven by steady global growth, a rise in energy prices and heightened business confidence. The Institute for Supply Management's manufacturing activity gauge touched a 13-year high earlier this fall and has been consistently in expansion territory this year.
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(END) Dow Jones Newswires
November 22, 2017 09:52 ET (14:52 GMT)