Factory orders decreased 0.1% in October - Nomura

Analysts at Nomura offered a breakdown of the US Factory orders data from overnight.

Key Quotes:

"Factory orders decreased 0.1% in October, weighed down by a sharp drop in durable goods transportation orders. 

However, revisions to the preliminary durable goods numbers for October and to numbers for prior months were positive. Topline durable goods orders in October were revised up to a 0.8% m-o-m decline (previously a 1.2% decline), driven by a strong upward revision to durable goods orders excluding transportation (0.5pp to +0.9%). 

Shipments of core capital goods, a solid indicator of current equipment investment, were revised up 0.7pp to 1.1%. Moreover, core capital goods orders, which showed some softness in the preliminary durable goods report, were revised up 0.8pp to +0.3%, indicating sustained momentum near term. Finally, revisions to September’s factory orders were also positive. 

Elsewhere, nondurable goods inventories increased 0.2% m-o-m, a slight deceleration from 0.7% mo-m in the two previous months. Altogether, today’s factory orders report with revised durable goods data indicates sustained momentum in the industrial sector. 

GDP tracking update: The upward revisions to core capital goods shipments (nondefense capital goods excluding aircraft), a proxy for business equipment investment, were positive to Q4 GDP, while factory inventories increased slightly less than we had expected. Overall, we revised up our Q4 GDP tracking estimate by one-tenth of a percent to 2.8%, from 2.7% previously."