INSTANT VIEW: Durable goods jump in September

NEW YORK (Reuters) - New orders for long-lasting manufactured goods rose unexpectedly in September by 0.8 percent, led by surging demand for defense goods and transportation equipment, the Commerce Department said on Wednesday.

KEY POINTS: * The jump in orders for durable goods - items intended to last three years or more - followed a 5.5 percent drop in August, previously reported as a 4.8 percent decline. * Wall Street economists surveyed by Reuters had forecast a 1.2 percent decline in September orders. * Orders for defense capital goods increased 19.6 percent in September, the largest since December 2007, after increasing 8.4 percent in August. * Transportation orders jumped 6.3 percent, including a 3 percent gain for autos and auto parts -- the biggest jump since July 2007. * Excluding transportation, September durables orders were down 1.1 percent after falling 4.1 percent in August.

COMMENTS:

PIERRE ELLIS, SENIOR GLOBAL ECONOMIST, DECISION ECONOMICS INC. NEW YORK:

"It's quite soft under the surface. This is before the full fury of the financial crisis. This is the last gasp before the financial turmoil, and the last gasp looks pretty shaky. All the financing to buy durable goods has been pretty constricted. We could see some pretty significant drops going forward. It looks like inventories are going to jump and production will surely be reduced. The economic outlook has been weakened by these numbers."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:

Moving aside from analyst's earnings estimates, I think that the stock markets themselves have already anticipated a far worse earnings decline than we are likely to see.

"(Markets have been very volatile but I think) this durable goods number and the psychological effect of the Fed likely cutting rates, both may help in shoring up the markets, especially since we have seen large gains in the last couple of days."

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES, NEW YORK:

"Aircraft were up 29 percent, that's not particularly startling... Excluding the transportation sector we have a decline of 1.1 percent, so this is not particularly encouraging.

"Expectations have not yet caught up with the reality of how severe the downturn is becoming. We're late to forecast the first decline in GDP, and we tend to continue forecasting a decline after the economy stops declining.

"My own view is that we've been in a recession for many months, probably since the first quarter of this year. That means we're at least 6 months into it, the longest has been 16 months, I think it's reasonable to expect this economic recession will last until the middle of next year."

ANNA PIRETTI, SENIOR ECONOMIST, BNP PARIBAS, NEW YORK:

"The underlying trend is still weak. The capital good measure is negative for a second consecutive month. This reinforces the idea that companies are cutting business investment because of tight credit conditions and prospects of lower revenues. We are going to see more weakness to come."

"Durable orders lead the GDP by three to six months. We do expect a negative GDP reading in the third quarter. We expect a reduction in structural and industrial spending."

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO. GREENWICH, CONNECTICUT:

"The number was better but if we ex out transportation it still shows a decline. So I take this as mixed data.

But with all the data coming out, nothing has imploded and that gives you a sigh of relief."

MARKET REACTION: STOCKS: U.S. equity index futures extend gains after surprise rise in durable goods data. BONDS: Treasury debt prices pare gains after data. DOLLAR: U.S. dollar falls after data.