Manufacturers ended the year on a high note! New orders for manufactured durable goods rose a solid 1.3 percent in December to a record $228 billion. As I mention in a press release, this marks the third consecutive monthly rise in durable orders, which is a good indication that the acceleration that has taken place in manufacturing recently (durable goods production grew at an annual rate in excess of 13 pecent in the 4th quarter) will carry forward into 2006.
While the increases in October and November were fueled by high-flying aircraft orders, December’s rise was driven by demand for machinery products, where the 6.5 percent rise in orders accounted for two-thirds of the overall monthly increase. This should be particularly welcomed in California, Texas and Illinois, where fully a quarter of U.S. machinery production resides.
At 8:30 tomorrow morning, the government’s first estimate of GDP growth in the fourth quarter wil be issued. while I expect the pace of economic growth slowed last quarter due to rising energy prices, today’s report is an early indication that the economy is presently on the rebound.