Despite a bigger-than-expected decline of 1.3 percent, today’s Commerce Department’s advanced report on durable goods for November shows that manufacturing continues to lead the economy out of recession.  The overall decline in orders was driven by an 11.9 percent plunge in transportation orders, which are extremely volatile from month-to-month.  The good news in today’s report is that outside of motor vehicles and aircraft, new orders for durable manufactured products rose a strong 2.4 percent – the third increase in the past four months and the fastest monthly rise in eight months. 

 The gains last month were diffuse, taking place in every industry outside of transportation, ranging from metals, to machinery, to electrical equipment, to computers and communications equipment.  And for most of these industries, this was the second increase in the past three months, which signals that the manufacturing recovery is gaining some traction in the fourth quarter after production moderated in the third quarter. 

 After slowing in recent months, new orders for nondefense capital goods excluding aircraft, rebounded in November and grew by a solid 2.6 percent.  Given that these orders are a good proxy for business investment and exports, today’s report is a hopeful sign that manufacturing will continue to lead the economic recovery.

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