Economic Report: Durable-goods orders fall 1.1%, business investment shrinks again, in bad sign for U.S. economy

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Bloomberg News/Landov

Orders for American-made durable goods such as commercial planes fell in September, reflecting broad weakness in manufacturing that’s shackled the broader U.S. economy.

The numbers: Orders for long-lasting or durable goods fell in September for the first time in three months and business investment shrank again, reflecting widespread weakness in manufacturing that’s acted as a drag on the broader U.S economy.

Orders dropped 1.1% last month, the government said Thursday. Economists surveyed by MarketWatch had forecast a 0.8% decline.

The decline in orders over the past 12 months steepened to 5.4%, representing the biggest yearly drop-off since the middle of 2016.

Orders slipped a smaller 0.3% if cars and planes are stripped out. Transportation often exaggerates the ups and downs in orders because of lumpy demand from one month to the next.

What happened: Orders declined 1.6% for new autos and parts, almost 12% for commercial planes and 4.5% for nonaviation military goods such as tanks, ships and defense systems. Computer bookings also fell.

Boeing continues to struggle to get its grounded MAX 737 jet back into the air and a decline in defense outlays was expected after a big increase in the prior month. Demand for new autos has been fairly steady, however.

Orders rose slightly for machinery and primary metals used in an array of products

A key measure of business investment, known as core orders, fell for the second month in a row. These orders have dropped 1.1% in the past three months and are running slightly below year-ago levels.

Read: Meet the lonely economist who thinks the Fed might just leave interest rates unchanged

The originally reported 0.2% increase in durable-goods orders in August was raised to 0.3%.

Big picture: The continuing U.S-China trade conflict has disrupted the global economy, left business scrambling for new suppliers and dampened investment.

The result: slower growth at home and abroad.

Central banks around the world are cutting interest rates to try to reverse the loss of momentum, but economists say speedier growth probably requires a breakthrough in U.S.-China talks and a smooth U.K. exit from the European Union. Neither outcome appears likely in the near future.

Read: U.S. adds 136,000 jobs in September, unemployment rate hits 50-year low

Market reaction: The Dow Jones Industrial Average DJIA, +0.17% and S&P 500 SPX, +0.28% were set to open modestly higher in Thursday trades

The 10-year Treasury yield TMUBMUSD10Y, +0.05% was little changed at 1.76%. The yield has been cut nearly in half over the past year.