If there is one economic report that can be extremely volatile, regardless of the direction of the broader economy, it has to be the monthly report on durable goods. This measures the big-ticket items bought and ordered each month. We also may have just been given a dud of a report ahead of Friday’s first look at third quarter gross domestic product (GDP).

The U.S. Department of Commerce reported that the headline report on durable goods fell by 0.1% in September, the final month of the third quarter. Bloomberg was calling for a 0.2% gain, and the range of Econoday estimates was −0.7% to a gain of 0.9%. The year-over-year reading on new orders was better. That was up 1.6%.

We also saw revisions for August that look a bit favorable and may trim some of the loss that might have been seen from September. The new orders report for durable goods in August was revised to a gain of 0.3% from a 0.0% headline reading. The new orders on a year-over-year basis were also revised higher, to a −1.0% reading from the −1.3% that was initially reported.

Durable goods excluding transportation rose by 0.2%, better than the 0.1% consensus estimate from Bloomberg. August’s ex-transportation reading was revised higher, to −0.7% versus a preliminary −1.1%.

Where things go awry is in the so-called core durable goods reading. This figure was down 1.2% on the monthly view in September but was down by 4.1% from a year earlier. August was revised higher, to a 1.2% gain on the monthly reading (from a preliminary 0.6% gain), while the core reading on a year-over-year basis was revised to −2.6% from −3.1%.

If we break down this number for how it can impact GDP, September’s preliminary figure was $227.3 billion. We saw a component breakdown in the actual report as follows:

• Transportation equipment, also down following two consecutive monthly increases, drove the decrease with a $0.6 billion (0.8%) to $77.5 billion.
• Shipments of manufactured durable goods in September is now up three of the last four months, and that figure rose by $2.0 billion (0.8%) to $234.5 billion.
• Inventories are now up for three consecutive months, increasing by $0.5 billion (0.1%) to $384.0 billion.
• On capital goods, the nondefense new orders for capital goods rose by $1 billion (1.5%) in September to $68.2 billion.

The lower numbers for September might have spooked the first look for GDP, but the higher August numbers in the revision may have easily negated the noise. Bloomberg is calling for third-quarter GDP to rise by 2.5%, with a price index coming in at 1.5%.

Stay tuned.

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