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.

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Census release
Durable goods drop despite rebound in core

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