NEW YORK (Reuters) â€" New orders for long-lasting U.S. manufactured goods fell more than expected in August to post their largest decline in a year as bookings for aircraft and motor vehicles tumbled, but business spending rebounded strongly, a government report showed on Friday.
KEY POINTS: * The Commerce Department said durable goods orders dropped 1.3 percent after a revised 0.7 percent increase in July. * Markets had expected orders to fall 1.0 percent from a previously reported 0.4 percent gain. * The decline last month reflected a 40.2 percent plunge in non-defense aircraft orders after a 69.1 percent surge in July. * Orders for defense aircraft fell 2.7 percent, and motor vehicle orders fell 4.4 percent. * Excluding transportation, orders rose by a more-than-expected 2.0 percent after falling by a revised 2.8 percent in July, previously reported as a 3.7 percent fall. * Markets had expected a 1.0 percent rise in orders excluding transportation. * Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded 4.1 percent in August after a 5.3 percent drop in July. * Markets had expected a 2.0 percent rise.
COMMENTS:
LAWRENCE GLAZER, MANAGING PARTNER, MAYFLOWER ADVISORS, BOSTON:
"Investors are looking at this (the durable goods report) as just one of many data points. You had an incredibly pessimistic view of the economy a little over a month ago, where investors were increasingly convinced we were headed toward a double dip (recession)."
"That view is a little less pessimistic today than it was over a month ago, even after this report."
MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD & C0, SAN
FRANCISCO:
"Good numbers. They were looking for a bounce back from last month, yet transportation orders are always a wild card. You throw that in there and it can really move the number around, get the needle moving, that was the case last month, it was a bounce back this month.
"The one good number within the numbers, computer and electronic orders up 3.8 percent. it was only down 0.8 percent last month . Machinery up 3.9 percent, that is a bounce from down 9.6 percent. But I like seeing those computer and electronic orders -- that is business spending, those are orders getting ready for the IT fourth quarter. Big driver for earnings in the fourth quarter. So you like to see that component -- I'm digging them."
FRANK LESH, FUTURES ANALYST, BROKER, FUTUREPATH TRADING LLC,
CHICAGO:
"It was better than expected on half of it and worse than expected on the other half so I guess we'll call it neutral for the time being. Durable goods tend to be volatile. They can change drastically every month but overall are supportive for the market, we extended our gains a little bit."
TOM SIMONS, MONEY MARKET ECONOMIST, JEFFERIES & CO., NEW YORK:
"The headline a little bit weaker than expected but all of the internals look good. The ex transportation number was up 2 percent versus consensus call of one. Capital goods orders non-defense ex aircraft much better than expected. Overall, I think it's a much stronger number than the headline suggests. It was a weak report last month but I think this definitely shows underlying improvement.
"I think that it's a sell for Treasuries, which--it seems like the market kind of got it right. It seems like the number on the headline would be a good reason to buy, but the internals of the number would indicate that that's not the case."
MARKET REACTION: STOCKS: U.S. stock index futures extend gains after durable goods orders. BONDS: U.S. Treasury debt prices extend losses. DOLLAR: U.S. dollar falls versus euro.
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