Courtesy of Doug Short.
The December Advance Report on November Durable Goods was released this morning by the Census Bureau. Here is the summary on new orders:
New orders for manufactured durable goods in November increased $7.5 billion or 3.8 percent to $207.0 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a slight October increase. Excluding transportation, new orders increased 0.3 percent. Excluding defense, new orders increased 3.7 percent.
Transportation equipment, up following two consecutive monthly decreases, had the largest increase, $7.0 billion or 14.7 percent to $54.4 billion.
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The new orders at 3.8 percent came in much better than the Briefing.com consensus estimate of 2.0 percent. The ex-transportation number of 0.3 percent matched the consensus forecast.
The first chart is an overlay of durable goods new orders and the S&P 500. We see an obvious correlation between the two, especially over the past decade, with the market, not surprisingly, as the more volatile of the two.
An overlay with unemployment (inverted) also shows some correlation. We saw unemployment begin to deteriorate prior to the peak in durable goods orders that closely coincided with the onset of the Great Recession. We’ll want to keep an eye on this correlation in the months ahead.
An overlay with GDP shows some disconnect in recent quarters between the recovery in new orders and the slowdown in GDP — yet another comparison we’ll want to watch closely.
The next chart shows the percent change in orders with and without transportation (namely vehicle orders) since the turn of the century.
Now let’s exclude defense orders.
And finally, let’s look at core durable goods orders, excluding both Transportation and Defense.
In theory the durable goods orders series should be one of the more important indicators of the economy’s health. But its susceptibility to major revisions of the previous monthly data suggestions caution in taking the data for any particular month too seriously.
