Ahead of the Bell: US durable goods

US durable goods orders expected to show another decline in October

Associated Press
US orders for durable goods up 0.4 percent
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In this Nov. 11, 2014 photo, 2015 Ford F-150 trucks are produced at the Dearborn Truck Plant in Dearborn, Mich. The Commerce Department releases durable goods for October on Wednesday, Nov. 26, 2014. (AP Photo/Paul Sancya)

WASHINGTON (AP) -- The Commerce Department releases its October report on durable goods. The report will be issued at 8:30 a.m. EST Wednesday.

ORDERS DROP: The expectation is that orders for long-lasting manufactured goods dropped 0.6 percent in October, marking the third consecutive monthly decline.

TEMPORARY DECLINES: Economists still believe that manufacturing is just going through a soft patch and that demand and production will pick up in coming months.

The overall number of orders has been dragged down in recent months by weakness in the volatile transportation category, which is heavily dependent on orders for commercial aircraft.

But economists believe the underlying demand for durable goods, items expected to last at least three years, will remain strong, reflecting in part the projected investment plans of businesses to buy new equipment to expand and modernize their operations.

The Institute for Supply Management reported that its closely watched gauge of manufacturing activity posted a solid gain to a reading of 59 in October, up from 56.6 in September. Any reading above 50 signals expansion.

The report is a good sign that the strength in manufacturing will be sustained in coming months.

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