Durable Goods Orders Decline on Falling Military Orders, Jobless Claims Fall, New Home Sales Rise, New Home Inventories Decline

- Durable Goods Orders for September fell 1.7% versus estimates of a 1.5% increase and a downwardly revised 5.3% decline in August.

- Durables Ex Transports for September rose .3% versus estimates of a .7% gain and a 1.8% decline in August.

- Initial Jobless Claims for last week fell to 331K versus estimates of 320K and 339K the prior week.

- Continuing Claims rose to 2530K versus estimates of 2528K and 2523K prior.

- New Home Sales for September rose to 770K versus estimates of 770K and a downwardly revised 735K in August.

BOTTOM LINE: Orders for US-made durable goods unexpectedly fell in September, restrained by a slump in demand for military equipment that overshadowed increases in business investment, Bloomberg said. Excluding the 39% decline in orders for defense equipment, orders rose .7%. International demand and rising business spending will continue to boost manufacturing, according to economists. Computer orders surged 1.1% in September and machinery bookings jumped 4.3%. I continue to believe manufacturing will remain healthy as companies gain confidence is the sustainability of the current expansion and rebuild depleted inventories.

Fewer Americans filed first-time applications for state unemployment benefits last week, Bloomberg reported. The four-week moving-average of claims rose to 324,750 from 317,000 the prior week. The unemployment rate for those eligible to collect benefits, which tracks the US unemployment rate, held steady at a historically low 1.9%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Sales of new US homes unexpectedly rose in September, prices gained and inventories fell, Bloomberg reported. New home prices rose 5% in September year-over-year to $238,000. As well, the number of new homes for sale fell 1.5%, to 523,000, the lowest number since January 2006. The inventory of new homes fell to 8.3 months worth at the current sales pace from nine months in August. This is just a start, but it is a big positive nonetheless, especially considering the credit market turmoil peaked in September. I expect New Home Sales to bounce back further this month.