The U.S. durables report undershot estimates
The U.S. durables report undershot estimates with a 4.4% transportation and defense-led October drop-back for durable orders, after the reverse pattern in August and September, with an expected 0.1% ex-transportation rise after downward bumps in the September orders data. Analysts saw weak October shipments and equipment data and a flat inventory reading, which combined to leave a disappointing report. Analysts still expect a Q3 GDP growth boost to 3.7% from 3.5%, with a $1 B trimming in equipment spending, but a $3 B hike for factory inventories that accompanies a $2 B boost for wholesalers and a $1 B trimming for retailers that leaves a $4X B hike for inventories overall. Analysts expect boosts of $6 B for construction, $4 B for service consumption, and $2 B for both exports and imports, but a $4 B downward bump for goods consumption. Analysts expect GDP growth of 3.0% in Q4, with growth in real equipment spending of 7% in Q4 after an estimated 0.1% (was 0.4%) clip in Q3. Analysts expect a $35 B inventory subtraction in Q4 that leaves a $46 B accumulation rate into year-end, following an estimated $117.1 (was 113.1) B subtraction in in Q3. Analysts expect a 0.1% October factory inventory rise with a 0.3% business inventory increase, given the flat factory durable inventory figure. Analysts assume a 2.0% October factory orders drop with a flat factory shipments figure, given an assumed 0.5% nondurable goods rise.