Today's durable goods report came in mixed but core orders may be back on an uptrend

Durables orders in November declined 1.3%, following a revised 3.1% drop the prior month. However, the latest was a little more negative than analysts' expectation for a 1.0% fall. Weakness was led by a drop in civilian aircraft orders. However, excluding transportation, new orders for durables rebounded 2.4% after a 1.9% contraction in 9October. Strength in core orders was broad based.

By major industries, transportation plunged a monthly 11.9% in November after falling 6.3percent the month before. The decline was mainly in nondefense aircraft which plummeted a monthly 53.1%-essentially Boeing orders. Also, within transportation, motor vehicles slipped 2.9% while defense aircraft & parts rebounded 7.9%.

Outside of transportation, strength was widespread, led by a 5.8% jump in computers & electronics, with electrical equipment up 5.6% and with primary metals up 3.0%. Also up were fabricated metals, machinery, and "other."

Business investment in equipment is showing signs of strength. Nondefense capital goods orders excluding aircraft in November rebounded 2.6% after falling 3.6% the prior month. Shipments for this series gained 1.0%, following a 1.2% contraction in October.

Outside of nondefense aircraft, today's report is notably positive. It looks like manufacturing is regaining some strength in the fourth quarter.

Census release
Durable goods drop despite rebound in core


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