Economy

Durable Goods Orders Miss Expectations in November

December 28, 2019

Orders of durable goods in November declined at their sharpest rate since May, falling 2.0 percent after a downward revision to October’s data. Economists were expecting orders to rebound by more than 1.0 percent in November.

A boost in transportation orders was anticipated due to the ending of the GM strike. Orders for autos and parts, however, fell short of expectations with just a 1.9 percent increase, not nearly enough to offset a 72.7 percent decline in orders for defense aircraft and parts, Census reported. Overall, transportation orders dropped 5.9 percent. Excluding transportation, orders were virtually flat.

Core capital goods orders, a proxy for future business investment, increased a slight 0.1 percent for the month.

“The outlook for manufacturing remains grim as business sentiment is sluggish, the outlook for profits is soft, and global trade flows shrink given ongoing uncertainty,” said MarketWatch.

The November advance report on manufacturers’ shipments, inventories and orders follows:

New Orders

New orders for manufactured durable goods in November decreased $5.0 billion or 2.0 percent to $242.6 billion. This decrease, down two of the last three months, followed a 0.2 percent October increase. Excluding transportation, new orders were virtually unchanged. Excluding defense, new orders increased 0.8 percent. Transportation equipment, also down two of the last three months, led the decrease by $4.9 billion or 5.9 percent to $79.2 billion.

Shipments

Shipments of manufactured durable goods in November, up following four consecutive monthly decreases, increased $0.2 billion or 0.1 percent to $251.6 billion. This followed a 0.1 percent October decrease. Fabricated metal products, up three of the last four months, drove the increase by $0.3 billion or 1.0 percent to $34.1 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in November, down two of the last three months, decreased $4.7 billion or 0.4 percent to $1,159.0 billion. This followed a virtually unchanged October increase. Transportation equipment, down following four consecutive monthly increases, led the decrease by $4.6 billion or 0.6 percent to $790.3 billion.

Inventories

Inventories of manufactured durable goods in November, up 16 of the last 17 months, increased $1.8 billion or 0.4 percent to $434.0 billion. This followed a 0.4 percent October increase. Transportation equipment, also up 16 of the last 17 months, drove the increase by $1.8 billion or 1.2 percent to $149.3 billion.

Capital Goods

Nondefense new orders for capital goods in November decreased $1.3 billion or 1.8 percent to $71.3 billion. Shipments decreased $0.7 billion or 0.9 percent to $74.4 billion. Unfilled orders decreased $3.1 billion or 0.5 percent to $684.3 billion. Inventories increased $1.1 billion or 0.6 percent to $196.8 billion. Defense new orders for capital goods in November decreased $5.5 billion or 35.6 percent to $10.0 billion. Shipments decreased $0.1 billion or 0.5 percent to $12.8 billion. Unfilled orders decreased $2.7 billion or 1.7 percent to $158.2 billion. Inventories increased less than $0.1 billion or 0.2 percent to $24.3 billion.

Revised October Data

Revised seasonally adjusted October figures for all manufacturing industries were: new orders, $496.2 billion (revised from $497.0 billion); shipments, $500.0 billion (revised from $500.2 billion); unfilled orders, $1,163.7 billion (revised from $1,164.3 billion) and total inventories, $698.8 billion (unchanged).