- Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd
Orders for capital goods declined more than expected in September, dropping the most in eight months. However, the decrease is likely to be temporary as businesses have been feeling upbeat in recent months. Bookings for goods, which are meant to last at least three years, fell 1.3% following the 18.3% dive in August, the Commerce Department said, whereas economists had called for a 0.5% gain. Core durable goods orders, which strip out volatile transportation equipment, declined 0.2%. Companies are waiting for more evidence of sustained consumer demand before considering high-dollar investments, even as households benefit from strong job creation and pared-down debt. As markets in Europe and emerging countries slow, fewer exports will probably also curtail orders in coming months, signalling US manufacturing will cool. The advance GDP estimate on Thursday is expected to show the economy grew at a 3.0% annual pace in the third quarter after the second quarter's robust 4.6% rate. Meanwhile, a separate report showed confidence among US consumers increased in October to the highest level in seven years, as gasoline prices decline and the labour market strengthened. The Conference Board's index rose to 94.5 this month, the highest since October 2007, up from the 89 reading in September. This is a welcome sign as improving consumer sentiment lay the groundwork for increase in spending, which makes up almost 70% of the US economy.
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