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Durable Goods Orders: Aircraft Fall But Core Suggests Boost to 4Q GDP

December 22, 2016
Bottom Line: Durable goods orders fell sharply in November due to volatility in aircraft orders, evidenced by only 13 Boeing aircraft orders in this report compared to 85 in September. Looking at the past 12 months, hardgood orders have declined at a 1.9% annualized rate. However, the October and November average of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is slightly above its Q3 level, suggesting that capital spending will have a positive impact on Q4 GDP growth. And core durable goods orders are now 1.2% above last year's level, the strongest pace of growth since early 2015.

Durable Goods Orders FELL by 4.6% in November, compared with market expectations for a decline of 4.8%. Revisions were very small.

Transportation Orders FELL by 13.2% with civilian aircraft orders dropping by 73.5% while motor vehicle orders climbed by 0.8%. Ex-transportation orders ROSE by 0.5%. Primary metals, machinery increased while fabricated metal products, declined.

Core Durable Goods Orders, those excluding both civilian aircraft and defense, ROSE by 0.6% and are 1.2% ABOVE their year ago level.

Nondefense Capital Goods Shipments FELL. Including civilian aircraft, they FELL by 1.2% and excluding them they ROSE by 0.2%

Durable manufacturing inventories ROSE by 0.1%.

The October and November average of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is slightly above its Q3 level, suggesting that capital spending will have a positive Q4 impact on GDP growth.