Durable Goods Orders Higher Than Expected

Washington, DC, Oct. 29, 2008--Durable goods orders to U.S. factories posted an unexpectedly strong showing in September -- the largest gain in three months -- on a surge in demand for airplanes and autos, the Commerce Department said.

The government reported Wednesday that orders for durable goods rose by 0.8 percent, surprising economists who had expected a decline. Orders had fallen by 5.5 percent in August, which was the biggest setback in nearly two years.

The September increase was the largest gain since a 1.4 percent rise in June, but all the strength came in the transportation sector. Demand for commercial aircraft, an extremely volatile category, shot up by 29.7 percent and orders for motor vehicles rose by 3 percent, the biggest gain in more than a year.

The big increase in orders for motor vehicles probably reflected the use of incentive packages by automakers trying to spur lagging demand during a generally dismal sales year. Orders for motor vehicles and parts had fallen by a sharp 8.8 percent in August. Demand is expected to remain weak, reflecting the hard economic times, rising unemployment and sagging consumer confidence.

Outside of transportation, orders fell by 1.1 percent following an even bigger 4.1 percent drop in August. The back-to-back declines in these areas indicated the pressures facing manufacturing now as the U.S. economy appears to be falling into a recession.

The 0.8 percent overall increase last month left orders for durable goods, products expected to last at least three years, totaling $207.8 billion.