Durable-Goods Orders Fall 1.6% in November
Orders for big-ticket durable goods slipped unexpectedly in November--the first such decline in three months--as demand for electronic equipment such as circuit boards and communications gear waned.
Orders for durable goods fell 1.6% to a seasonally adjusted $171.8 billion, the Commerce Department reported Friday. It was the first decline since a 3.6% drop in August. Many analysts had expected a 0.5% gain.
But the report also showed orders grew 0.5% in October, stronger than the department’s estimate for an anemic 0.1% a month ago.
Analysts said that the drop in the often-volatile figures notwithstanding, the economy is growing moderately.
Carl Palash, an economist at MCM MoneyWatch in New York, said that if the volatility is stripped away, the report “shows demand is on an uptrend but at a moderate pace.”
Durable-goods orders are a key gauge of the nation’s manufacturing sector. For the year so far, they are running 6% ahead of those for the same period a year ago.
The drop in November was due largely to a 9.3% plunge in orders for electronic and other electrical equipment, which had shot up 16.9% a month earlier.
“November was just a pullback from an extraordinarily high level,” said economist Mark Zandi of Regional Financial Associates in West Chester, Pa.
There are signs that orders for such items as semiconductors and telephone equipment already have started to rebound.
Financial markets welcomed news of the drop, as it offered evidence that the economy is not growing at an inflationary pace and that the Federal Reserve Board, therefore, would be less likely to decide to raise interest rates. The Dow Jones industrial average rose 14.23 points to a record high of 6,560.91. Bond yields fell.
In a separate report, the Labor Department said that the number of new claims for unemployment benefits fell by 15,000 last week to 335,000. Many analysts had expected a decline of 5,000 from the previous week’s 350,000 level, highest since last July. The less-volatile four-week moving average of new weekly claims dropped to 341,250 from 342,250 the previous week.
“The report is consistent with moderate but healthy growth” in the labor market, said economist Sung Won Sohn of the Norwest Corp. in Minneapolis.
Transportation orders were unchanged in November. Rising demand for automobiles and other items was offset by a 34% decline in orders for aircraft, economists said.
Excluding transportation, orders were off 2.2%. That represents the first drop since August and is the largest decline since a 2.4% decrease for January 1993.
But orders for industrial machinery and equipment, including computers and household appliances, posted a 0.3% gain, the first advance since July. Bookings for primary metals rose 0.2%, also the first increase since July.
Orders for nonmilitary capital goods excluding aircraft fell 1.6%, erasing a 1.6% gain in October.
These orders often are a barometer of businesses’ plans to expand and modernize, and have been a major source of economic strength during the current expansion.
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Durable Goods
New orders, seasonally adjusted in billions of dollars: $171.8
Source: Commerce Department
