U.S. durable goods orders rebound in November on recovery in volatile nondefense aircraft orders

U.S. durable goods orders rebound in November, driven by a recovery in the volatile nondefense aircraft orders category. The headline index rose 0.8 percent sequentially in the month, a significant rebound after recording a fall of 4.3 percent in the prior month. The top-line figure was slightly below the consensus expectations of a rise of 1.6 percent. The rise in overall orders was mainly due to a recovery in nondefense aircraft orders, which rose 2.9 percent.

Stripping the volatile transportation category, the numbers were more downbeat, with new orders falling 0.3 percent after an upwardly revised rise of 0.4 percent in October. The fall in ex-transportation orders was significantly softer than forecasts, which were possibly conditioned in part by strong indicators of orders from the November manufacturing ISM, noted Barclays in a research report.

November’s falls were concentrated in the machinery and electrical equipment categories, which were just partly countered by rises elsewhere. Smoothing through the monthly volatility, recent data continued to indicate towards a marked slowdown in the underlying trend of ex-transportation orders in recent months, with orders rising 0.8 percent in November.

In the meantime, new orders of capital goods excluding aircraft dropped 0.6 percent sequentially in September after a rise of 0.5 percent in October. The reading for November was slightly weaker than consensus expectations. The implications of these incoming data are not as soft as they might first seem, as they were accompanied by sizeable upward revision to the estimate for October. However, lower frequency movements evidently indicate an easing trend, with core capital goods order falling 2.6 percent in November.

Shipments of core capital goods dropped 0.1 percent sequentially in November after an upwardly revised rise of 0.8 percent in October.

“Smoothed measures suggest that the underlying trend for core capital goods shipments has also moderated, with shipments up just 1.4 percent 3m saar in November compared with 8.5 percent 3m saar in August”, added Barclays.

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