In October, U.S. durable-goods orders rose at their fastest pace in a year, according to the Commerce Department. Demand for the long-lasting manufactured goods rose 4.8 percent from a month earlier to a seasonally adjusted $239.4 billion. Economists expected a 2.7 percent gain in overall orders, according to a survey by The Wall Street Journal.
Durable goods are products designed to last longer than three years, like vehicles, computers and metals. Orders for machinery, computers and electrical equipment and appliances all increased in October, while orders for motor vehicles and parts declined. Durable goods inventories were little changed for a second month.
Orders for civilian aircraft nearly doubled in October. Orders for civilian aircraft and parts increased 94.1 percent in October from September. Nondefense capital goods excluding aircraft, rose 0.4 percent last month. The metric is down 4 percent through the first ten months of the year, compared with the same period of last year.
After posting strong increases in July and August, defense orders have fallen for the last two months, dropping 3.7 percent last month. When excluding defense, overall orders rose 5.2 percent.
The report is being seen as a sign the U.S. factory sector has begun to stabilize. The data added to bullish reports on retail sales, housing starts, home sales, and the labor market. The strong economic growth outlook is likely to encourage the Federal Reserve to raise interest rates before the end of the year.
Orders have increased for four straight months. Demand increased 1 percent after excluding orders tied to transportation. However, the numbers are still down slightly through the first ten months of this year when compared with the same period in 2015.
Manufacturing activity has been volatile over the past year. The Federal Reserve’s measure of manufacturing output rose in October for the fourth time in five months. However, the index remains slightly down from a year earlier. Manufacturing accounts for 12 percent of the U.S. economy.