|
|
 |
|
|
|
|
Brian Wesbury
Chief Economist
|
|
Bob Stein
Deputy Chief Economist
|
|
 | New Orders for Durable Goods Declined 0.7% in November |
|
| Posted Under: Data Watch • Durable Goods |
Implications: Today's report on durable goods helps show that despite 5% real GDP growth in Q3 the economy remains a Plow Horse, not a Race Horse. However, don't fret too much about the soft headline on orders for durable goods in November. Although orders came in lower than anyone expected, this is a very volatile series and it's not unusual for it to decline about five months a year even when the trend is upward, like in the middle of the 2000s or in the late 1990s. New orders for durable goods dropped 0.7% in November, falling for the third time in four months. But a pullback in orders for defense aircraft led the decline in November, which suggests a rebound next month. Orders were still down outside the transportation sector but only 0.4%, and these orders are still up 3.9% from a year ago. Meanwhile, "core" shipments," which exclude defense and aircraft, increased after a poor showing in October and are up 4.3% versus a year ago. Expect further gains in the coming months. Signaling future gains, unfilled orders for "core" capital goods rose 0.2% in November, hitting a new record high, and are up 9% from a year ago. Orders and shipments for durables should accelerate in the year ahead. Consumer purchasing power is growing with more jobs and higher incomes, while debt ratios remain very low, leaving room for an upswing in big-ticket spending. Meanwhile, profit margins are high, corporate balance sheets are loaded with cash, and capacity utilization is breaching long-term norms, leaving more room (and need) for business investment.
Click here for PDF version
|
|
|
These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
|
|
Archive
Search by Topic
|
|
|
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
|