Sales of US military aircraft more than doubled in September, helping send orders for American manufactured goods to a four-year high, the government reported Thursday. The result far overshot economists' expectations but masked weakness in capital goods, metal manufacturing and electronics, according to the Commerce Department.
Total orders for big-ticket manufactured goods unexpectedly jumped $2 billion, or 0.8 percent, to $262.1 billion for the month, coming after an upward revision to August's gains to reach the highest level since July 2014. Analysts had expected a drop of 1.8 percent. Auto sales reversed August losses, adding 1.3 percent, while civilian aircraft sales fell 17.5 percent lower.
But defence aircraft gained 119.1 percent, to reach $11.7 billion for the month. Excluding the broad swings in the highly volatile transportation sector, however, September was a sluggish month, posting only a 0.1 percent gain. And leaving out the defence sector, sales were actually 0.6 percent lower, eating into the gains in the prior month.
Fabricated metal products, a sector suffering from higher prices due to President Donald Trump's import tariffs, fell 0.7 percent. Sales of computers, electrical appliances, and capital goods - a measure that can track oil prices and general business investment - all fell. Ian Shepherdson of Pantheon Macroeconomics said the strong aircraft sales were likely to slow in October while the two straight months of weakness in capital expenditures or "capex" merely marked a slowdown after a period of above-trend strength.
"We see no reason for the capex recovery to falter, given the strength of earnings growth and the huge backlog of replacement spending," he wrote in a client note.
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