New orders for big-ticket manufactured goods fell by the largest amount in more than six years in October, led by a big drop in transportation equipment.
The Commerce Department reported Tuesday that orders for durable goods - those items expected to last for three years or more - shed 8.3 percent last month, to $210 billion. Excluding transportation, new orders fell by a more modest 1.7 percent. Excluding defense, new orders decreased 6.4 percent.
The 8.3 drop in new orders was the largest since July 2000, when orders shed 14 percent.
The latest numbers are sure to embolden those who say the economy is in the midst of a sharp slowdown, but the durable goods data are notoriously volatile. Indeed, the September report showed an impressive 8.7 percent gain.
Transportation equipment, down following two consecutive monthly increases, had the largest decrease, plunging 21.7 percent. The pullback was driven by non-defense aircraft and parts.
Shipments of manufactured durable goods, up two of the last three months, increased 0.6 percent. Machinery, up seven of the last eight months, had the largest increase, $0.5 billion, or 1.9 percent, to $28.3 billion.
Commerce said unfilled orders increased 1.2 percent and are up 17 or the last 18 months.
Inventories of manufactured durable goods in October, up nine of the last ten months, increased $2.3 billion, or 0.8 percent, to $293.8 billion. Non-defense new orders decreased $13.6 billion, or 15.6 percent, to $73.2 billion, and shipments decreased $1.6 billion, or 2.3 percent, to $66.4 billion.
"Up and down monthly swings in computers and electronic products orders (waiting for Microsoft’s new operating system) and motor vehicles and parts (sales incentives) have contributed to this volatility," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "Overall, the report is consistent with the view that manufacturing is experiencing decelerating growth and that there is a mixed outlook even within capital goods industries.”