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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Sandy Batten December 23, 2020
• Orders again surprise to upside in November with upward revision to October.
• Seventh consecutive monthly increase in orders.
• Shipments rose; inventories jumped; order backlogs eased.
Manufacturers' orders for durable goods increased 0.9% m/m (3.8% y/y) in November on top of an upwardly revised 1.8% m/m gain in October (initially 1.3%). A 0.7% m/m gain had been expected by the Action Economics Forecast Survey. This was the seventh consecutive monthly increase. New orders have risen 45.8% since their recession low in April and are just 0.8% below their pre-COVID February level.
Orders for nondefense capital goods excluding aircraft, a leading indicator of business capital spending, also rose further, increasing 0.4% m/m (+6.5% y/y) in November with a significant upward revision to October (to 1.6% m/m from the initially reported 0.8% m/m gain). This was the seventh consecutive monthly increase. From their April low, nondefense capital goods orders excluding aircraft have risen 15.7% and are 6.1% above their pre-COVID January level.
Shipments of core capital goods, a reliable coincident indicator of business spending on equipment, rose 0.4% m/m (+5.9% y/y) in November following an upwardly revised 2.6% monthly jump in October (initially +2.4% m/m). The November figure was the highest level of core capital goods shipments on record, dating back to 1992. The October/November level of core shipments is 16.5% annualized above the Q3 average, auguring another strong gain in business spending on equipment in the fourth quarter.
Orders for transportation equipment rose 1.9% m/m (+1.8% y/y) in November on top of a 1.5% m/m gain in October. Orders for motor vehicles and parts orders rebounded, rising 2.4% m/m in November following a 2.5% m/m fall in October (revised from -3.2% m/m). Aircraft orders rose another 7.3% m/m after their 45.9% monthly jump in October–with all the November gain coming from defense orders. Computer and electronic product orders edged up 0.4% m/m in November after an upwardly revised 4.2% monthly surge in October, the largest monthly gain since October 2018.
Total shipments increased 0.3% m/m (+1.9% y/y) in November after an upwardly revised 1.5% monthly increase in October (initially 1.3%). Shipments of transportation products also rose 0.3% m/m (-1.4% y/y), the same gain as in October. Shipments excluding transportation rose 0.3% m/m on top of an upwardly revised 2.2% m/m jump in October (initially 2.0%). Holding back shipments in November were a 1.1% m/m decline in shipments of computers and a 1.1% m/m drop in shipments of electrical equipment.
Unfilled orders for durable goods slipped 0.1% m/m (-6.2% y/y). Excluding transportation, they rose 0.7% m/m (2.4% y/y). Inventories of durable goods rose 0.9% m/m (1.1% y/y), their largest monthly gain since July 2108. Excluding transportation, inventories increased 0.5% m/m (-2.2% y/y).
The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.
Durable Goods NAICS Classification | Nov | Oct | Sep | Nov Y/Y % | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
New Orders (SA, % chg) | 0.9 | 1.8 | 2.1 | 3.8 | -1.5 | 7.1 | 5.0 |
Transportation | 1.9 | 1.5 | 3.3 | 1.8 | -4.8 | 9.2 | 4.7 |
Total Excluding Transportation | 0.4 | 1.9 | 1.5 | 4.8 | 0.4 | 5.9 | 5.1 |
Nondefense Capital Goods Excl. Aircraft | 0.4 | 1.6 | 1.9 | 6.5 | 1.7 | 4.6 | 4.1 |
Shipments | 0.3 | 1.5 | 0.5 | 1.9 | 0.8 | 6.6 | 2.6 |
Nondefense Capital Goods Excl. Aircraft | 0.4 | 2.6 | 0.8 | 5.9 | 2.4 | 5.7 | 1.1 |
Unfilled Orders | -0.1 | -0.2 | -0.2 | -6.2 | -1.8 | 3.9 | 2.8 |
Inventories | 0.9 | 0.3 | 0.3 | 1.1 | 4.1 | 5.2 | 3.4 |