TGIF data roundup: Core cap goods orders beat, consumer mood gets a boost
Fixes typo in title above post to say BOOST not BOOS
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TGIF DATA ROUNDUP: CORE GOODS ORDERS BEAT, CONSUMER MOOD GETS A BOOST
Investors headed to the finish line of an earnings-heavy but relatively data-light week with two economic indicators that surprised to the upside.
New orders for long-lasting, U.S.-made merchandise USDGN=ECI dropped by 0.8% last month, not quite as steep as the 1.0% decrease economists feared.
But the Commerce Department's durable goods report - which includes everything from air fryers to attack drones - also revised August's topline down to show a 0.8% decline (previously unchanged).
Drilling down beneath the headline number, commercial and defense aircraft orders slid by 22.7% and 23.7%, respectively, while total defense-related capital goods jumped 6.4%.
Excluding defense, new orders dropped 1.1%, but stripping away transportation-related items, they rose by 0.4%.
"Unsustainable growth in aircraft investment has powered overall equipment outlays in the past two quarters, and this will begin to unwind in Q4," writes Barnard Yaros, U.S. lead economist at Oxford Economics. "Policy uncertainty around the election also puts a ceiling on the near-term trajectory for equipment spending."
New orders for core capital goods - which excludes aircraft and defense items and is often viewed as a barometer of U.S. corporate capex plans - posted a welcome upside surprise, gaining 0.5% and thereby handily beating the 0.1% consensus increase.
That consensus beat "tentatively points to an improvement in the previously flat trend, given that September increase followed decent gains in August," says Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "But we think these gains more likely are a blip rather than a real shift."
"Most indicators of investment intentions and demand for manufactured goods remain very weak."
Separately, consumers are in a better mood this October than previously thought.
The University of Michigan's (UMich) final take on current month consumer sentiment USUMSF=ECI was 1.6 points higher than originally reported, landing at 70.5 - sunnier than the even 69 analysts expected.
Breaking it down, survey respondents' assessment of their current conditions improved by 3.5%, while their near-term expectations rose 1.6%.
It's worth noting that the current conditions component, now at 64.9, remains lower than April 2020's 74.3 print, which fell amid the panic of pandemic-related shutdowns.
Coincidentally, "this month's increase was primarily due to modest improvements in buying conditions for durables, in part due to easing interest rates," says Joanne Hsu, director of UMich's Consumer Surveys.
However, "the upcoming election looms large over consumer expectations," Hsu adds.
One-year inflation expectations cooled to 2.7%, while longer-term, five-year inflation expectations held firm at an obstinate 3.0%.
Even so, that's cooler than September's core CPI reading (the most recent available), which landed at a hotter-than-expected 3.3%.
(Stephen Culp)
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FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:
WALL STREET ON THE MEND, GETS REPRIEVE FROM LOWER TREASURY YIELDS - CLICK HERE
DOW INDUSTRIALS: FROM WEEKLY WIN STREAK TO DAILY LOSING STREAK - CLICK HERE
TIME TO TAKE PROFIT ON SOME TRUMP TRADES, CITI SAYS - CLICK HERE
RACHEL REEVES WALKING A TIGHTROPE WITH BUDGET - RBC BLUEBAY - CLICK HERE
SHARP SWINGS - CLICK HERE
EUROPE BEFORE THE BELL: BUSY EARNINGS, CHINA GETS THE BLAME - CLICK HERE
MARKETS ENTER THE EYE OF RISK-EVENT STORM - CLICK HERE
Durable goods https://reut.rs/40kerEX
Core capital goods https://reut.rs/3Yf0ky2
UMich current conditions and expectations https://reut.rs/3NDPOLN
UMich inflation expectations https://reut.rs/3YzOdgq
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