–In Dur Orders, Aircraft, Metals, Machinery are Stronger

By Joseph Plocek

WASHINGTON (MNI) – The September durable goods data showed the
expected rebound in orders, but not to the July level, suggesting some
underlying slowing in a still-growing manufacturing sector. Meanwhile,
unemployment claims have returned to a more “normal” level, suggesting
little overall change in the labor market.

September durables orders were pretty much as expected at +9.9%,
+2.0% excluding transportation (after three months of drops) and +9.1%
ex defense.

Boeing Corp. reported 143 new orders after just one in August, so
nondefense aircraft orders printed +2,641%. Motor vehicles printed
-0.4%, but overall transportation was +31.7% in its best showing since
January 2010 as defense aircraft also jumped.

Other components included: Primary metals +4.1% in a rebound,
Machinery +9.2% in a reversal, Computers -2.5%, and Electronics -2.7%.

Nondefense capital goods shipments advanced 1.4% but these remain
weak, so Q3 capital spending should slow. That may be one result of the
business response to the looming fiscal cliff.

Overall shipments were +0.8% and inventories +0.3%. The latter
confirms that inventories will add to GDP.

Looking ahead, October orders might post a slowing. That would be
the typical start-of-quarter effect of a severe seasonal adjustment
factor that has to be overcome.

Separately, the Labor Department reported Initial Unemployment
Claims for the October 20 week fell 23,000 to 369,000. Claims had
dropped at the start of the quarter and then surged, with the effects of
a state’s failure to recertify claims at the start of Q4 and the
Columbus Day holiday apparently overtaking the trend.

The 4-week moving average for unemployment claims is 368,000,
probably a good gauge of underlying trend. There was “nothing unusual”
in the latest weekly report with all states reporting, according to a
Department of Labor analyst. The state of California reported +26,935
for unadjusted claims in the week of Oct. 13, suggesting that state was
the problem reporter earlier.

Claims averaged 375,000 in September and 372,000 in August so the
latest data suggest the labor market is little changed to perhaps only a
little better.

Continuing unemployment claims were 3.254 million in the October 13
week, down 2,000. This compares to 3.281 million in mid-September,
suggesting slight improvement. However, the ending of extended benefits
programs also could have contributed to this downtrend.

**MNI Washington Bureau: (202)371-2121**

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