October’s Durable Goods Manufacturing Growth Was More Impressive Than We Thought

New orders for capital goods were even stronger than previously thought in October but weakened by more than expected in November.

Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending plans, rose four-tenths of a percentage point last month. That was less than the six-tenths forecast by economists, indicating a bigger post-election slowdown than anticipated.

October’s figure for orders of these so-called core capital goods was revised up from a growth of seventh-tenths to 1.6 percent, indicating that businesses were orders were growing at better than twice the rate initially reported.

The revision for October suggests the rebound was going better than the president’s critics suggested in the final month of the 2020 election, particularly for the manufacturing sector whose revival he made central to his 2016 campaign. November’s figure indicates that the election results, surging infections, and uncertainty about lockdowns weighed on the economy more heavily than thought and perhaps that the news of vaccine effectiveness did not give the expected boost.

This was the seventh straight month of expansion for U.S.-made capital goods.  Compared with a year ago, core capital goods orders are 08 percent higher. The ongoing expansion of business investment could help the economy continue to grow even if consumer spending continues to slide lower.

New orders for all durable goods—those meant to last at least three years—rose a seasonally adjusted 0.9 percent in November. That beat expectations for the month but represented a steep slowdown from the upwardly revised 1.8 percent growth in October. Initially, October was reported as growing a seasonally adjusted 1.3 percent.
Orders for transportation equipment rose 1.9 percent in November. Orders for cars and parts escalated 2.4 percent.  Orders for defense aircraft and parts soared 15.7 percent. Orders for nondefense aircraft and parts fell 2.8 percent.

Orders for machinery rose 0.9 percent. Orders for computers and electronic equipment rose 0.4 percent, with computers rising 2.7 percent.