U.S. durable goods orders continued to drift lower in August, and economists at BMO Nestbitt Burns see few positive signs buried in the data.

“There were some signs of possible stability hidden below the as-expected 0.3% August drop in durable goods bookings,” says BMO Nesbitt Burns. “Capital goods, communications and chip industries were bouncing up from low levels, for example. However, the broad picture remained weak and the attacks themselves were the catalyst for a sharp break in consumer and business confidence. This will preclude expectations that gains in orders lie ahead.”

The firm says that the continued widespread slide in orders in the months before the attacks suggest that fourth quarter factory activity will slump sharply. “We expect manufacturing to drop at a pace well in excess of the 4% rate of decline expected for overall GDP during that period.”

These weak numbers should lead to further cuts to interest rates, says BMO. “The Fed meets next Tuesday and again in very early November. They will likely be viewing extremely weak statistics at those gatherings and substantial easing steps should be forthcoming in response,” it concludes.