New orders for durable goods increased in November, rising 2.5 percent, the second consecutive gain and the 17th increase in the last 19 months. Total durable-goods orders are up 11.1 percent from a year ago. The November gain puts the level of total durable-goods orders at $286.3 billion, the second-highest level on record (see top of first chart).
New orders for nondefense capital goods excluding aircraft or core capital goods, a proxy for business equipment investment, fell 0.1 percent in November after gaining 0.9 percent in October, and 1.4 percent in September. Core capital goods orders have risen in 17 of the last 19 months, putting the level at $78.8 billion, just below the record high $78.9 billion in October. Core capital-goods orders are about 12 percent above the $70.1 billion from February 2012, the previous record high from before the pandemic (see bottom of first chart).
Among the categories in the report, gainers outnumbered decliners five to two. Among the individual categories, transportation equipment led with a surge of 6.5 percent. Within the transportation equipment category, nondefense aircraft jumped 34.1 percent, defense aircraft rose 3.0 percent, and motor vehicles and parts increased 1.0 percent as auto manufacturers cope with ongoing chip shortages. Among the other categories, computers and electronic products gained 4.0 percent, the catch-all “other durables” category rose 1.5 percent, fabricated metal products gained 0.6 percent, and primary metals rose 0.3 percent, while electrical equipment and appliances fell 1.1 percent, and machinery orders decreased by 1.0 percent (see second chart).
Durable-goods manufacturing continues to be one of the strongest areas of the economy. Demand remains robust for the manufacturing sector overall as the economy adjusts to new patterns of activity in the post-pandemic world. The pandemic appears to have accelerated structural changes to the economy, affecting labor, housing, manufacturing, and services. While ebbs and flows in new Covid cases can impact levels of economic activity, the outlook for growth is favorable. However, upward pressure on prices continues as demand outpaces supply. As labor, materials, and logistical issues are alleviated, price pressures are likely to ease, but the process may take a lengthy period of time.
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