Durable Goods Orders Rise Above Forecasts in November but Business Spending Gauge Edges Down

By Tom Ozimek
Tom Ozimek
Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'
December 24, 2021 Updated: December 24, 2021

U.S. orders of durable goods—products designed to last at least three years—jumped by a forecast-beating 2.5 percent in November, delivering a positive signal for the economy heading into 2022, but a measure reflecting business spending plans fell, suggesting shortages were crimping capital investment.

New orders for U.S.-manufactured durable goods in November rose $6.5 billion, or 2.5 percent, to $268.3 billion, the Commerce Department said on Dec. 23 (pdf). Consensus forecasts cited by FXStreet expected durable goods orders to rise by a more modest 1.6 percent.

A sharp 34.1 percent rise in orders for commercial aircraft and a 3.0 percent increase in defense aircraft (pdf) accounted for a portion of the upside bounce.

“There were sizable increases for defense and nondefense aircraft and parts orders, which can be highly volatile from month to month,” Chad Moutray, chief economist for the National Association of Manufacturers, said in a Twitter post.

Orders for the volatile civilian aircraft category fell 4.1 percent in October, with Boeing reporting on its website that it had received just 10 aircraft orders in October compared to 109 in November, which would account for a portion of the month-over-month surge.

Other major contributors to the headline durable goods number were orders for defense capital goods (16.0 percent), communications equipment (11.1 percent), transportation equipment (6.5 percent), and computers (4.0 percent).

Orders for non-defense capital goods excluding aircraft, a closely-watched proxy for business spending plans, edged down 0.1 percent in November, after shooting up 0.9 percent in October to a record $78.9 billion.

On a year-over-year basis, orders for non-defense capital goods excluding aircraft, also known as core capital goods, rose 11.7 percent.

“Overall, the durable goods data continue to reflect a strong upward trend, even as manufacturers struggle with supply chain bottlenecks, worker shortages and soaring costs,” Moutray said in a separate post.

On the whole, durable goods orders shot up 21.5 percent on a year-on-year basis, boosting manufacturing, which accounts for around 12 percent of the U.S. economy.

Still, shortages of labor and raw materials made it harder for factories to fulfill orders. Unfilled orders rose 0.7 percent over the month in November and 6.2 percent over the year.

Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'