US: Factory orders post modest rise in September - Wells Fargo

The US factory orders report showed a gain of 0.3% in September. According to analysts from Wells Fargo, the rise was led by nondurables. They see a moderate pick-up in core capital goods orders in the horizon but warn that headwinds remain. 

Key Quotes: 

“Factory orders were largely in line with expectations and the advance report on durable goods. Ex-transportation, new orders have risen in six of the past seven months. The inventory-to-shipments ratio ticked down to 1.34. On a year-ago basis, manufacturers’ new orders are in positive territory for the first time since October 2014, when the oil price slide began.”

“Core capital goods orders declined 1.3 percent in September, slightly below the preliminary estimate and reversing August’s gain. On a three-month annualized basis, however, core capital goods orders are up 5.1 percent, the fastest pace September 2015.”

“Equipment spending remains uncharacteristically soft for an expansionary period, and we expect some modest improvement in the quarters ahead.”