· Additional weakness last month was provided by a 10.2% (+3.3% y/y) decline in orders for computers & electronic products that very much reflected a 25.6% (-24.6% y/y) drop in computers.

· During the last ten years there has been a 69% correlation between the y/y change in durable goods orders and the change in output of durable goods..

· Orders for nondefense capital goods dropped 15.6% and less aircraft they were off 5.1%. Offsetting the slide in computer orders was a 1.4% (13.4% y/y) increase in new orders for machinery and a 5.1% (8.4% y/y) rise in electrical equipment & appliances. During the last ten years there has been an 86% correlation between the y/y change in capital goods orders less aircraft and the y/y change in business fixed investment in equipment & software from the GDP accounts.

· Orders for motor vehicles & parts rose 1.4% (-9.5% y/y) while primary metals orders increased 1.1% (7.4% y/y).

· Durable goods orders less transportation fell 1.7% after an upwardly revised 0.5% October increase. Consensus expectations had been for a 0.1% rise in total orders less transportation.

· Shipments of durable goods increased a slight 0.6% (3.3% y/y) after a little revised 2.7% October tumble. Less the transportation sector shipments rose a similar 0.5% (5.8% y/y) after a 2.2% slide the prior month. During the last ten years there has been an 82% correlation between the y/y change in durable goods shipments and the change in industrial production of durable goods.

· Order backlogs rose another 1.2% (21.8% y/y) and less transportation rose 0.9% (13.2% y/y). Unfilled orders for nondefense aircraft & parts surged by 2.4% (53.9% y/y).

· Durable inventories rose 0.8% (8.2% y/y). Less the transportation sector inventories rose 0.6% (9.1% y/y) and the inventory to shipments ratio outside of transportation added to its September surge.

October

September

Y/Y

Nondefense Capital Goods

 Excluding Aircraft