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Economy in Brief

U.S. Durable Goods Orders Continue to Rise
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
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