Durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. The first release, the advance, provides an early estimate of durable goods orders. About two weeks later, more complete and revised data are available in the factory orders report. The data for the previous month are usually revised a second time upon the release of the new month's data. (Bureau of the Census, U.S. Department of Commerce) Why Investors Care
| Released on 12/27/07 For Nov 2007 | ||||||||||||
| ||||||||||||
Highlights
Durable goods orders in November showed a definite softening in manufacturing. Durable goods orders rose 0.1 percent in November, following a 0.4 percent drop in October. The gain in November was below the consensus projection for a 3.0 percent increase in new durables orders. Excluding the transportation component, new orders posted a 0.7 percent decrease in November, following a 0.9 percent drop in October. Today's report indicates that manufacturing is softening. However, it may not be as negative as the basically flat overall number and drop in ex-transportation. Much of the weakness was in defense capital goods. Outside of aircraft and defense (which overlap), new orders were mixed.
Industries that were positive in November were primary metals, up 0.6 percent; electrical equipment, up 1.7 percent; and transportation, up 1.9 percent.
Industry categories showing declines in November were fabricated metal products, down 0.6 percent; machinery, down 2.0 percent; and computers & electronics, down 1.2 percent.
Nondefense capital goods orders rebounded 3.8 percent in November after declining 2.5 percent in October. This suggests some improvement in capital spending down the road. However, for the near term, the news is not as good. Shipments of nondefense capital goods slipped 0.4 percent in November, following a 0.6 percent dip in October. The weak shipments numbers indicate that the producers' durable equipment component in GDP will be flat in the fourth quarter unless December numbers pick up.
Year-on-year, new orders for durable goods fell to down 0.2 percent in November from up 2.0 percent in October. Year-on-year unfilled orders edged down to up 17.0 percent in November from up 17.9 percent the month before.
Today's report indicates that there is only modest forward momentum in manufacturing and that is coming from unfilled orders for the most part. It is possible and even likely that the latest rounds of interest rate cuts by the Fed have not yet worked their way to boosting manufacturing demand and that we will see a firming in manufacturing early in the new year. But for now this sector is essentially flat. Bonds will like the data but equities likely will not. Soft initial claims data today will likely reinforce these effects.
Durable goods orders fell 0.4 percent in October, following a 1.4 percent decline in September. While this series is volatile, the numbers are adding up to softening in the manufacturing sector. Even excluding the transportation component, new orders fell 0.7 percent in October, but did follow a 1.1 percent rebound in September. More recently, manufacturing surveys have been weakening, including the Empire State survey and especially the Philly Fed survey which turned negative in December.
New orders for durable goods Consensus Forecast for November 07: +3.0 percent
Range: +1.0 percent to +4.8 percent
![[Chart]](chart.gif)
|
Monthly fluctuations in durable goods orders are frequent and large and skew the underlying trend in the data. In fact, even the yearly change must be viewed carefully because of the volatility in this series. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}