U.S. durable-goods orders rose last month on a surge in military spending, but underlying data pointed to broad weakness in business investment.
Orders for durable goods--products like earth movers and refrigerators designed to last at least three years--rose a seasonally adjusted 0.4% in October from a month earlier, the Commerce Department said Wednesday. That partly reversed a 0.9% drop in September.
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Economists surveyed by The Wall Street Journal had expected overall orders to fall 0.5%.
The rise largely reflected a 45.3% surge in demand for defense aircraft and parts. But that masked weak demand for other goods.
Excluding transportation, orders fell 0.9%, the biggest drop since December 2013. Excluding defense-related products, orders fell 0.6%.
Orders for nondefense capital goods excluding aircraft-a measure of business spending on equipment and software--fell 1.3% in October after dropping at the same rate in September.
Orders for machinery, computer products, fabricated metal products and primary metals all fell last month.
The broader trend suggests demand for long-lasting goods continues to rise as more Americans gain jobs and firms gain confidence to invest. So far this year, orders for durable goods have risen 7.5% compared with 2013. Orders for nondefense capital goods excluding aircraft have climbed 5.4%.
But the latest monthly figures also suggest the economy may be cooling from its fast growth pace in the spring and summer.
The U.S. economy grew at an annualized pace of 3.9% in July through September, concluding a six-month stretch that marked the strongest growth in more than a decade, the government reported this week. Many economists expect economic growth to slow to between 2% and 3% in the fourth quarter, and Wednesday's report could reaffirm those expectations.
Troubles in Japan and Europe are threatening to dent U.S. exports and hurt sales at American factories. But U.S. companies and consumers are also being helped by lower fuel costs after a fall in global oil prices. And they appear to be gaining enough confidence to invest as Americans sustain higher spending.
A Federal Reserve report earlier this month suggested economic growth could slow this quarter. U.S. industrial production-the output of factories, utilities and mines-fell 0.1% in October from the prior month.