Durable Goods: Miss Mostly Offset By Stronger Revisions Again

Bottom Line: Durable goods orders rose less than expected in November, but that was mostly offset by stronger revisions to October data. The trend in durable goods orders continues to improve at both the headline and core level. The October and November average of nondefense capital goods shipments ex-aircraft, our best proxy for the equipment and software investment portion of GDP's investment component, was sharply above the pace of Q3, suggesting strong Q4 investment. Durable Goods Orders ROSE by 1.3% in November, compared with market expectations for an increase of 2.0%. Moreover, the prior month was revised higher from -1.2%to -0.4%. Transportation Orders ROSE by 4.2% with civilian aircraft orders climbing by 14.5% while motor vehicle orders climbed by 1.4%. Ex-transportation orders FELL by 0.1%. Core Durable Goods Orders, those excluding both civilian aircraft and defense, ROSE by 0.33% and are 6.4% ABOVE their year ago level. Nondefense Capital Goods Shipments ROSE. Including civilian aircraft, they ROSE by 2.1% and excluding them they ROSE by 0.3% Durable manufacturing inventories ROSE by 0.2%. The October and November average of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is sharply above its Q3 level, suggesting that capital spending will have a positive Q4 impact on GDP growth.