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First Cut: New orders for durables decline in November mainly on defense goods, including aircraft

New orders for durable goods were down 2.0% in November. The decline reflected a reset for defense goods which were the driver behind the October rise which was revised down to up 0.2% (previously up 0.5%). Excluding defense, orders were up 0.8%.  Month-to-month fluctuations should not disguise that the trend for new orders is lackluster. The recessionary conditions in manufacturing are not deep, but they are present.

Swings in transportation orders continued to drag down overall orders for durable goods. Transportation was down 5.9% in November. Excluding transportation, orders were flat. While motor vehicle orders got the expected rebound after the end of the strike at GM with an increase of 1.9%, declines in order for aircraft brought the component down. Nondefense aircraft orders were down 1.8% while defense was down 72.7%. Boeing reported an increase of 53 order in November from October, but not all of these may have been booked by the end of the month.

“Core” new orders – new orders less civilian aircraft capital goods and defense capital goods – were up 0.8% in November from October. This was a hint that there were some orders outside of the more volatile sectors had some activity. There was an increase of 8.9% for computers and 2.9% for communications equipment.

Unfilled orders declined 0.4% in November, in part a reflection of backlogs being worked down in the absence of fresh orders. There were also further cancellations for nondefense aircraft and parts (down 0.3%) and defense aircraft and parts (-2.6%) that contributed to the decline in unfilled orders, although some is also delivery of finished units.

Shipments edged up 0.1% in November, a lackluster pace. Inventories continued to rise about on trend at up 0.4% for the month.

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