U.S. durable goods orders for September came in weaker than expected today. The U.S. Department of Commerce is reporting that orders for big-ticket items increased by 0.8% to US$176.26 billion. That follows a 0.1% drop in August, revised up from a previous estimate of a 1.1% fall.

Economists had expected a 1.5% jump in orders for September.

However, BMO Nesbitt Burns says that large upward revisions to August figures actually make the net impact of the report stronger than expected.

“The recovery in business investment and factory conditions continues unabated in the United States,” says RBC Financial. “This is likely to be favourably received by markets today and strongly supports the prevailing view that the U.S. economy will experience a second-half rebound in economic activity.”

RBC reports that non-defence capital goods excluding transport surged by an impressive 3.9%, well above consensus calls. Orders for communications equipment also surged by 5.8%. Defence orders fell by 26.7%. Total durable goods shipments were up by 2.5%.

“There is a robust trend emerging in ex-transportation new orders, pointing to the rebound in inventories and the upswing in exports that we expect to power the Q4 U.S. economy. As well, the sizable 3.9% rebound in non-defense capital goods orders ex aircraft reinforces the theme that capital spending is finally contributing in a big way to the economic acceleration,” finds Nesbitt.

“The durable goods report adds weight to the increasing strength seen in other factory indicators for October, such as the Empire State and Philadelphia-area surveys, and raises the odds of sustained strong growth in the fourth quarter. This is music to the Fed’s ears, perhaps, but potentially troublesome for the bond market,” Nesbitt concludes.