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US durable goods orders fall 2 percent in October

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US durable goods orders fall 2 percent in October

US durable goods orders fell 2 percent in October, after the 16-day government shutdown weighed on business confidence and delayed large-scale investments in machinery. The monthly indicator was in-line with median estimates, according to Bloomberg.

The monthly report on durable goods is one of the mostly closely monitored by market participants in the foreign exchange and equity markets. The report measures the dollar value of advanced orders for durable goods received by US manufacturers. It is used to gauge near-term economic activity in the manufacturing industry.

In total, new orders for manufactured durables fell $4.6 billion to $230.3 billion in October, according to the US Census Bureau. New orders excluding defense decreased 1.3 percent. New orders excluding transportation decreased 0.1 percent. Transportation equipment fell 5.9 percent after two consecutive months of increases.

Shipment of durables increased $0.5 billion to $233.2 billion, the highest level since 1992, when the Census Bureau started publishing the series on the basis of the North American Industry Classification System. The gains were led by transportation equipment, which rose 1.1 percent to $70.9 billion.

The government shutdown was likely the biggest factor for the monthly drop. A reluctance to invest in machinery and computers amid an uncertain economic environment pared two consecutive months of gains. Investment is likely to pick up “once we get more fiscal clarity, which is likely to come in the next few months,” according to Millan Mulraine of TD Securities USA LLC.

Business investment could face pressure in the early part of 2014, as Congress mulls over the federal budget. The partial government shutdown ended with a temporary agreement to raise the budget through February 7, 2014, potentially setting up a second round of confrontation ahead of the deadline. House Republicans and Senate Democrats were deadlocked over how to fund President Barrack Obama’s landmark 2010 Affordable Healthcare Act, which introduced landmark changes to the healthcare industry.

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