November Durable Goods Orders Take a Dive

The Advance Report on Manufacturers’ Shipments, Inventories and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:

New orders for manufactured durable goods in November decreased $11.0 billion or 4.6 percent to $228.2 billion, the U.S. Census Bureau announced today. This decrease, down following four consecutive monthly increases, followed a 4.8 percent October increase. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders decreased 6.6 percent.

Transportation equipment, also down following four consecutive monthly increases, drove the decrease, $11.7 billion or 13.2 percent to $76.6 billion. Download full PDF

The latest new orders number at -4.6% month-over-month (MoM) was close to the consensus of -4.7%. The series is down 1.9% year-over-year (YoY).

If we exclude transportation, "core" durable goods came in at 0.5% MoM, which beat the consensus of 0.2%. The core measure is only up 1.8% YoY.

If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 2.4% MoM but only 1.8% YoY.

Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It rose 0.9% MoM but is down 3.2% YoY.

For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

Durable Goods Components

The next chart shows year-over-year percent change in Durable Goods. We've highlighted the value at recession starts and the latest value for this metric.

Core Durable Goods