NEW YORK (Reuters) - New orders for long-lasting manufactured goods slipped in August on weak demand for motor vehicles, government data showed on Wednesday, but a rebound in a gauge of business spending supported views the economy could avoid another recession.
KEY POINTS: * The Commerce Department said durable goods orders dipped 0.1 percent after an unrevised 4.1 percent jump in July. * Economists polled by Reuters had forecast durable goods orders unchanged last month. * Orders were held back by an 8.5 percent drop in bookings for motor vehicles - the largest decline since February last year.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS, WASHINGTON:
“Marginal slippage in August after a positive July is not enough to suggest trend has turned negative and in fact the August breakdown contains some positive signals for business investment which should give some support to Q3 GDP estimates... The auto data is disappointing, suggesting less of a rebound from Q2 tsunami-related weakness than previously thought, with July’s auto gain flattered by seasonal adjustments assuming temporary shutdowns... While manufacturing survey evidence has been mixed, August’s industrial production report was also consistent with a positive underlying picture. August’s durables report, while marginally negative and marginally below consensus, if anything reduces worries over the health of the US manufacturing sector.
WAYNE KAUFMAN, CHIEF MARKET ANALYST, JOHN THOMAS FINANCIAL, NEW YORK:
“It shows that we’re not falling off a cliff, which helps. This is a sigh of relief, and slightly reassuring in the short-term. There’s still room to rise (in stocks) since we’re not overbought yet, though we’re no longer as oversold.”
MARKET REACTION: STOCKS: U.S. stock index futures add to gains BONDS: U.S. bond prices on the long end pare gains FOREX: Euro trims gains versus the dollar