WASHINGTON (Reuters) - Orders for long-lasting U.S. manufactured goods fell more than expected in October as orders for motor vehicles and parts dropped amid strikes by the United Auto Workers (UAW) union against Detroit's "Big Three" automakers.
The Commerce Department's Census Bureau said on Wednesday that orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, dropped 5.4% last month, also weighed down by declines in bookings for civilian aircraft. Data for September was revised lower to show orders for these goods rising 4.0% instead of the previously reported 4.6%.
Economists polled by Reuters had forecast durable goods orders would decline 3.1%. Durable goods orders rose 4.0% on a year-over-year basis in October.
Manufacturing, which makes up 11.1% of the economy, is shuffling along as higher interest rates cool demand. Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
Transportation equipment orders plunged 14.8% last month after increasing 11.6% in September. Motor vehicle and parts orders fell 3.8%, likely because of shortages caused by the UAW's strikes at a number of U.S. factories owned by General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler parent Stellantis (NYSE:STLA). The industrial action has since ended.
Civilian aircraft orders tumbled 49.6%. Boeing (NYSE:BA) reported on its website that it had received 123 orders for civilian aircraft, compared to 224 in September.
There were increases in orders for computers and electronic products as well as fabricated metal products. But orders for electrical equipment, appliances and components fell. Machinery orders were unchanged.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dipped 0.1% after slipping by a downwardly revised 0.2% in the prior month. These so-called core capital goods orders were previously reported to have risen 0.5% in September.
Core capital goods shipments were unchanged for a second straight month. Shipments of non-defense capital goods dropped 0.3% following a 0.2% decline in the prior month.
These shipments feed into the calculation of equipment spending in the gross domestic product report. Business spending on equipment spending contracted in the third quarter. The economy grew at a 4.9% annualized rate last quarter.