(RTTNews) - After reporting a steep drop in U.S. durable goods orders in the previous month, the Commerce Department released a report on Wednesday showing orders unexpectedly rebounded in the month of October.
The Commerce Department said durable goods orders climbed by 0.6 percent in October after plunging by a revised 1.4 percent in September.
Economists had expected durable goods orders to decrease by 0.8 percent compared to the 1.2 percent slump that had been reported for the previous month.
The unexpected increase in durable goods orders came as jumps in orders for aircraft and parts more than offset a steep drop in orders for motor vehicles in parts, resulting in a 0.7 percent increase in orders for transportation equipment.
While orders for motor vehicles and parts tumbled by 1.9 percent due to the recent strike at General Motors (GM), orders for commercial aircraft and parts and defense aircraft and parts spiked by 10.7 percent and 18.1 percent, respectively.
Excluding orders for transportation equipment, durable goods orders still rose by 0.6 percent in October after falling by 0.4 percent in September. Ex-transportation orders had been expected to inch up by 0.1 percent.
Notable growth in orders for fabricated metal products, machinery, and computers and related products contributed to the bigger than expected increase in ex-transportation orders.
The report also said orders for non-defense capital goods, excluding aircraft, a key indicator of business spending, surged up by 1.2 percent in October after falling by 0.5 percent in September.
Shipments in the same category, which is the source data for equipment investment in GDP, climbed by 0.8 percent in October after a 0.8 percent decrease in the previous month.
"The rise in durable goods orders last month was driven by a surge in orders for underlying capital goods, suggesting that business equipment investment is holding up better than anticipated," said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, "Together with the October advance trade data, released yesterday, we now expect GDP growth to slow to 1.5% annualized in the fourth quarter rather than the 1.0% we had previously forecast."