Durable goods orders grew less than expected

Data from the U.S. Department of Commerce showed that U.S. durable goods orders increased at a monthly rate of 0.2% in October 2024. Although positive growth was achieved, it was far lower than economists 'expectations of 0.5%. Moreover, compared with a decrease of-0.7% in September, the growth in October still appeared weak. Specifically, this growth was mainly boosted by the new aircraft contract signed by Boeing (BA). Although such large orders can improve data, they do not reflect the overall recovery of the overall manufacturing industry, showing that the recovery in the industrial sector is still far away.

If transportation goods (such as aircraft and cars) are excluded, durable goods orders increased by only 0.1% in October, almost in line with expectations, but slowed significantly from September's 0.5% increase. This shows that except in the transportation sector, other major manufacturing sectors are still in a downturn and cannot provide stable support for economic growth.

Core durable goods orders fall

Another key data is the change in core durable goods orders, which is after deducting transportation orders. Core durable goods orders fell 0.2% in October, which was not only lower than economists 'expectations of 0.1%, but also significantly lower than September's 0.7%. This indicator is the key to measuring business investment and represents the company's confidence in future production and expansion. Data showed weakness in business spending and did not show a recovery in investment activity.

Boeing order growth is not enough to support overall data

Although commercial aircraft orders rose sharply in October, nearly 9%, such orders are usually volatile and aircraft manufacturing takes long times to deliver, so the immediate impact on the current economy is relatively limited. Therefore, although the order growth of a single company may have improved the data for a while, it cannot change the fact that the overall manufacturing industry is still in a downturn.

The growth of the manufacturing industry is weak and depends on policy promotion in the future

Manufacturing in the United States already accounts for a relatively small proportion of gross domestic product (GDP), but it still has an important impact on the economy. Analysts pointed out that the overall data showed that U.S. manufacturing did not show strong signs of recovery. The downturn in manufacturing also reflects weak business investment and demand against the backdrop of high inflation and high interest rates.

FED interest rate cuts may have a boost, but trade policy remains a worry

The market is optimistic that the Fed may continue to cut interest rates in 2024, and it is expected that this will stimulate business investment and manufacturing demand to a certain extent. However, the Trump administration's trade policies, especially high tariffs on countries such as China, may create uncertainty. If other countries respond retaliatively, it may put greater external pressure on U.S. manufacturing.