Durable Goods Hang Tough

Economists and business owners alike have grown used to the notion that durable goods can be among the most volatile of all monthly economic readings. It turns out that durable goods were just flat in the month of November.

The U.S. Department of Commerce showed that new orders were flat at 0.0% on the monthly adjusted reading, for a reading of $238.8 billion. Bloomberg had a consensus estimate of -0.5%, so the reading held up better than expected. The new orders component was up 1.2% from a year ago. Transportation equipment drove the increase, with a $0.3 billion (or 0.4%) gain to $82.2 billion.

Excluding transportation, new orders was -0.1% in November, just a tad weaker than the 0.0% estimate from Bloomberg. Things looked worse on a year-over-year basis, with ex-transportation orders coming in at -1.9%.

October’s numbers were revised marginally lower to 2.9% rather than 3.0% on the total new orders headline on the monthly reading, and down to 0.4% from 0.5% on the year-over-year reading.
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The core capital goods reading was down by -0.4% in November on the monthly reading and was -1.8% on the year-over-year reading. The report said:

Nondefense new orders for capital goods in November decreased $5.2 billion or 6.3 percent to $77.2 billion. Shipments increased $1.8 billion or 2.3 percent to $80.2 billion. Unfilled orders decreased $3.1 billion or 0.4 percent to $754.3 billion. Inventories decreased $0.7 billion or 0.4 percent to $174.3 billion.

Defense new orders for capital goods in November increased $4.3 billion or 44.4 percent to $14.1 billion. Shipments decreased $0.8 billion or 7.5 percent to $9.8 billion. Unfilled orders increased $4.3 billion or 2.9 percent to $151.3 billion. Inventories decreased $0.4 billion or 1.9 percent to $21.4 billion.

With durable goods being so volatile, it generally takes a much more significant miss or beat against expectations to really influence the market. This was also one of the last economic readings ahead of the Christmas break, and trading volumes are currently running very light. This is also close enough to estimates that the gross domestic product report should not influence any significant changes to fourth-quarter GDP estimates.