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Durable goods orders for September rose $4.3 billion, or 1.9% to $237.1 billion. This represents the fifth consecutive month of increase and shows that manufacturing is continuing its rebound from pandemic related supply-chain interruptions. While September’s increase was better than August’s 0.4%, it falls well short of the increases of 11.7% in July and 7.7% in June. Transportation remains strong as the 1.9% figure is almost halved to 0.8% when transportation is excluded. The other main categories showed modest increases at best, indicating the economy is still in a fragile state.
The Commerce Department reported that a sharp increase in exports, combined with a fall in imports has resulted in a much smaller than expected trade deficit of $79.4 billion in September. At $122 billion, exports increased by 2.7% per month, while imports of $201.4 billion decreased by 0.2%. Food exports at $12.8 billion (a 13.6% monthly increase) were key to September's improvement and reflective of the China trade agreement. On the import side, vehicles had the largest increase of 11.3%, an increase of 2.0% since February. In addition, imports of capital goods increased by 1.4% to 6.7% over February, showing strong domestic business investment, despite the challenges associated with the pandemic.
The Bureau of Economic Analysis reported the US economy grew 33.1% per year in the third quarter of 2020, beating forecasts of 31%. This represents the biggest expansion ever, rebounding from a 31.4% drop in the second quarter. Personal spending was the main driver, led by services (increases in health care as well as food services and accommodations) and goods (led by motor vehicles and parts as well as clothing and footwear). Increases in private inventory investment, exports, nonresidential fixed investment, and residential fixed also contributed to growth. The GDP is still 3.5% below pre-pandemic levels.
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