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First Cut: November factory orders decline as expected on soft durables, firmer nondurables

New orders for factory goods in November were down 0.7%, a decrease that matched market expectations. New orders for durable goods were down 2.1% — mainly on a 5.9% drop in transportation — and nondurables were up 0.6% — mainly on an increase of 2.7% in petroleum and chemicals.

As previously reported, transportation orders were held down by declines in nondefense aircraft (down 2.2%) and defense aircraft (-72.9%).

New orders for hard goods have been weak. Soft goods have also seen slow new orders, but some of that is masked by variations in commodities prices, particularly energy costs.

Unfilled orders were down 0.4% in November and continued to feel the pinch of cancellations at Boeing for the 737 MAX aircraft. Shipments were up 0.3% in November, although much of that was due to nondurables with durables shipment flat for the month.  Inventories remained on the rise at a mild pace at up 0.3% overall, but durables were up a slightly higher 0.4%. There’s a hint that unless orders pick up, the need to replenish inventories will be less.


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