Ahead of the Bell: US durable goods
WASHINGTON (AP) — Orders for long-lasting U.S. manufactured goods likely increased in September, reflecting a rebound in volatile commercial aircraft demand and a jump in retail spending.
Economists expect orders for durable goods rose 7 percent in September, according to a survey by FactSet. That would follow a 13.2 percent decline in August, which was largely because of a steep drop in aircraft orders.
The Commerce Department will release the report at 8:30 a.m. EDT Thursday.
Durable goods are products expected to last at least three years. Orders can fluctuate sharply from month to month.
Orders are sharply lower this year, which has weakened manufacturing and slowed economic growth. High unemployment and low pay have kept consumers from spending. Businesses have held back on investing in machinery and equipment. And slower global growth has dampened demand for U.S. exports.
The August report contained a promising sign. Orders that reflect business investment plans rose for the first time since May.
Americans also boosted their spending at retail businesses in September, buying more cars, appliances and furniture. Stronger consumer spending could help offset declining demand from overseas.
Still, economists are concerned that business investment could falter further if Congress doesn't reach an agreement to avert steep tax hikes and government spending cuts scheduled to take effect in January. And Europe's troubles could worsen.
Business orders for core capital goods, the proxy for business investment, are up a modest 2.3 percent from January through August, compared to the same period a year ago.
Even with the August decline in overall orders, demand for durable goods was still 33.5 percent higher than the recession low hit in April 2009.
And there is some indication that U.S. factories may be emerging from their weak stretch. A closely watched survey from the Institute for Supply Management, said manufacturing grew in September for the first time in four months. It was buoyed by a jump in new orders and stronger hiring.
The unemployment rate fell in September to 7.8 percent. That's the lowest level since January 2009 — President Barack Obama's first month in office. The rate fell because a government survey of households found a huge increase in the number of people who had jobs.
Still, a jump in part-time employment accounted for most of the gain. And a separate survey of employers showed that manufacturing employment dropped by 16,000 in September after falling by 22,000 in August.
The weak job market has been a key topic in this year's presidential election, which is down to its final days. Voters will have one final employment report to consider, which comes out four days before Election Day.
The economy is not growing fast enough to generate much hiring. Growth slowed to a tepid annual rate of 1.3 percent in the April-June quarter, down from 2 percent in the previous quarter. Most economists see growth staying at or below 2 percent in the second half of the year. The Commerce Department will issue its first estimate of growth in the July-September quarter on Friday.