Durable goods orders in U.S. slump, but consumer confidence jumps
(Reuters) – Demand for U.S.-made capital goods recorded its biggest drop in eight months in September, a cautionary note for an economy that otherwise seems to be moving forward at a steady clip.
A moderation in home price gains in August, also reported on Tuesday, offered a further suggestion the economy may have cooled a bit, although consumer confidence jumped to a seven-year high this month.
“The weak capital goods orders and house price data confirm the slowdown in activity, but the burst in consumer confidence suggests that U.S. households are very optimistic about the outlook,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 1.7 percent last month, the Commerce Department said. It was the largest drop in so-called core capital goods demand since January, and it surprised economists who had expected a 0.6 percent gain.
Some analysts blamed the weakness on slowing growth in China and the euro zone, but they said there was no reason for alarm, noting that an array of other manufacturing indicators have remained relatively strong.
“You have to look at the comprehensive evidence we have seen regarding manufacturing, and it tells you the manufacturing sector is doing fine,” said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.
A second report showed the S&P/Case-Shiller composite index of home prices in 20 metropolitan areas gained 5.6 percent in August from a year earlier. It was the slowest year-on-year increase since November 2012, and just the latest sign the housing sector continues to muddle along.
Separately, the Conference Board said its index of consumer attitudes increased to 94.5 this month, the highest reading since October 2007, from 89.0 in September. The jump came despite a sharp stock market sell-off, with households cheered by a steadily firming labor market and falling gasoline prices.
The strong confidence reading and healthy corporate earnings boosted U.S. stocks. Prices for U.S. Treasury debt were trading lower, while the dollar fell against a basket of currencies.
