Core Capital Goods Orders Fall to Smallest Annual Gain Since 2020

A key measure of business spending fell by three-tenths of a percentage point in October, down from the initial estimate of a one-tenth decline, the Commerce Department said Monday.

Orders for capital goods excluding defense and aircraft are considered a proxy for business spending and often looked to for a window into the confidence of businesses about economic growth over the coming year.

This was the second consecutive monthly decline in so-called core capital goods orders. In September, orders fell by 0.2 percent.

Shipments of this category of goods, which feeds into the calculation of gross domestic product, were flat in October after a 0.1 percent decline in September.

Compared with a year ago, core capital goods orders are up 0.3 percent. That is the smallest 12 month gain since December of 2020.

Overall orders for factory goods fell 3.6 percent in October, dragged lower by the transportation sector. That was worse than the three percent decline economists had forecast.

Durable goods orders fell 5.4 percent, unrevised from the initial estimate released late last month. The government releases an advanced read on durable goods a couple of weeks prior to the full report on manufacturing orders and shipments.
This was the second decline in the past eight months.

Orders for non-defense aircraft, which are mainly Boeing passenger planes, fell 49.6 percent after rising 90 percent a month earlier. Civilian aircraft orders are a very volatile category because of the huge price tags of passenger planes and large fleet orders from airlines.

Motor vehicle orders declined 0.8 percent, the second straight monthly decline. In September, they fell 0.1 percent.

Non-durable goods orders fell 1.9 percent.

Orders for household appliances rose 1.7 percent after a sharp decline in the prior month. These are looked to as a sign of consumer strength and an indicator for the housing market as home buyers frequently make appliance purchases.