US Durables Goods Orders Nov P: 2.5% (exp 1.8%; prev -0.4%) - Good durable goods report led by transportation - Neil's Summary
US Durables Goods Orders Nov P: 2.5% (exp 1.8%; prev -0.4%)
− Durables Ex-Transportations Nov P: 0.8% (exp 0.6%; R prev 0.3%)
All numbers are m/m unless otherwise noted.
After bouncing back (after revisions) to a mild (+0.1%) gain in October following September's decline, headline durable goods new orders increased very strongly in November, up by +2.5%, the most in six months, fueled by transportation orders. Headline new orders are now up six of the last seven months and sixteen of the last eighteen. Expectations for the headline number were for an increase of 1.8%.
Non-defense aircraft and parts (which fell by -4.1% in October and -31.2% in September) fueled the gain in transportation orders increasing by 34.0%. Also helping were increases in defense aircraft and parts (+3.0% after falling -18.5% in October), and motor vehicles (+1.0% after increasing +5.8% in October). Headline transportation orders were up +6.5% (-0.3% in October).
Stripping out transportation orders, things were still solid, up +0.8%, also above expectations, after increasing +0.3% in October (revised down from +0.5%). Non-defense orders were up +2.0%.
Turning to shipments, headline shipments increased for the 15th of the last 18 months, and six of the last seven, up +0.7% building on the 1.7% upwardly revised increase in October. These were also fueled by transportation. Ex-transp shipments were still up though +0.5% (after increasing +0.9% in October). They were +0.7% ex-defense. Backlogs (unfilled orders) and inventories both increased for the tenth straight month up +0.7% and +0.6% respectively. Backlogs are up 6.2% y/y and inventories 8.5%.
Y/y headline orders are up 21.5% y/y and ex-transp up 16.5%. Shipments are up 12.8% from the same period last year, 13.9% ex-transp.
Looking further at the details of new orders, outside of computers, which were down for the third straight month, machinery, down for the second, and electrical equipment/appliances all major categories were up led by transportation as noted and communications equipment which was up double digits for a second month.
Looking at capital goods orders (goods used for production as opposed to consumption), those also were up due to transportation and defense, increasing +5.5% (-2.4% in Oct). Stripping out the transportation and defense orders (so "core" capital goods orders which are a proxy for business cap ex) orders declined for the first month in nine falling by -0.1%. They are up though 15.3% y/y. Core capital goods shipments (a figure that will be used to calculate investment in the government’s fourth-quarter gross domestic product report) were up +0.4% and are now up 13.0% y/y. So despite the modest pullback business spending remains very strong according to this report.
Overall, another good report even when stripping out the volatile transportation and defense sectors. Hopefully we get back to the growth in core capital goods orders signaling businesses continue to invest.
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