Strong Growth in Durable Goods Sales Lifted November’s Factory Orders Higher

By January 6, 2014Economy

The Census Bureau reported that new manufactured goods orders rose 1.8 percent in November, rebounding from the 0.5 percent decline observed in October. Over the past 12 months, new factory orders have risen 4.9 percent, but that somewhat overstates the year-over-year change. This data was highly volatile for much of 2013, with large shifts in aircraft orders pushing the data up and down. Illustrating this, the year-to-date growth (from December 2012) was a more modest 2.6 percent, and November’s level of new factory orders ($497.9 billion) was not much different than what was experienced in June ($497.1 billion).

Still, even with the volatility, it is clear that new factory orders have moved higher, particularly when you look at the longer-term data. Over the past three years, new factory orders have grown 17.3 percent, up from $424.6 billion in November 2010.

Looking specifically at the November 2013 data, the increase stemmed largely from strong growth in durable goods sales, up 3.4 percent for the month. In contrast, new nondurable goods orders were up just 0.3 percent. The report reflects healthy gains in aircraft and motor vehicle orders in November, and if you exclude transportation from the analysis, the increase in durable goods sales would be a more modest 1.1 percent. Nonetheless, the broader durable goods measure reflects a slow-but-steady increase in new orders, up 3.0 percent since January and 1.9 percent over the past two months. The latter figure suggests the pace of sales has accelerated more recently, consistent with other indicators.

Outside of aircraft, durable goods sectors with the largest monthly increases in new orders in November were furniture and related products (up 5.9 percent), machinery (up 3.3 percent), motor vehicles and parts (up 2.4 percent), and computers and electronic products (up 1.8 percent). These were partially offset, though, by declines in electrical equipment and appliances (down 1.9 percent) and primary metals (down 0.5 percent).

Meanwhile, shipments of manufactured goods increased 1.0 percent, its strongest monthly gain since July. Durable and nondurable goods shipments rose 1.8 percent and 0.3 percent, respectively. Sectors with the greatest increases in November included machinery (up 4.2 percent), transportation equipment (up 2.0 percent), computers and electronic products (up 1.6 percent), furniture and related products (up 1.9 percent), petroleum and coal products (up 1.4 percent), and primary metals (up 0.8 percent).

At the same time, textile mills (down 2.1 percent), beverage and tobacco products (down 1.5 percent), apparel (down 1.1 percent), paper (down 0.9 percent), and nonmetallic minerals (down 0.4 percent) were among those major manufacturing sectors with reduced shipments for the month.

Chad Moutray is the chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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