The Durable Goods Report is produced monthly by the Census Bureau and provides data based on a survey of about 4,000 manufacturers of durable goods. These are products that are considered capital goods with a life of at least 3 years. The major components tend to be aircraft, computer equipment and automobiles. Generally, the durable goods figures are highly volatile and reflect large purchases such as automotive fleets, aircraft orders and defense projects. The report does provide some guidance on overall business demand – particularly business investment – but is not one of the most valuable economic indicators produced by Census.
Durable Goods orders rose by about 3.5 percent in November, following a slight decrease in October.
Transportation equipment led the increase, rising $6.3 billion or 8.4 percent to $81.2 billion, in large part due to increases in orders of nondefense aircraft and parts. Interestingly, across nearly all industry categories, orders in November were up, while shipments fell. While rising orders could be seen as a positive sign for the economy; this indicator is highly volatile and is driven by aircraft orders and shipments.
Unfilled orders for durable goods (particularly when excluding defense goods) have risen but at the same time inventories rose to $384.7 billion, the highest level in years, suggesting some disconnect in manufacturing demand and production.
The Durable Goods report is extremely variable, and there is no indication of an upward – or for that matter a downward – trend. Aircraft orders were up sharply in November, though shipments fell by almost 8 percent. Almost every category showed increasing inventory levels. This is inconsistent with some of the other data that show a strengthening economy.
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