December 23, 2022 Reading Time: 2 minutes

New orders for durable goods fell 2.1 percent in November, following a 0.7 percent gain in October. Total durable-goods orders are up 10.6 percent from a year ago. The November decrease puts the level of total durable-goods orders at $270.6 billion (see first chart).

New orders for nondefense capital goods excluding aircraft, or core capital goods, a proxy for business equipment investment, rose 0.2 percent in November after increasing 0.3 percent in October. Orders are up 6.4 percent from a year ago, with the level at $75.2 billion.

However, price increases have had an impact on capital goods orders. In real terms, after adjusting for inflation, real new orders for durable goods decreased by 2.4 percent in November, following a 0.4 percent gain in October. Real new orders for nondefense capital goods excluding aircraft gained 0.3 percent after a similar 0.6 percent rise in October (see second chart). Real new orders for capital goods are down 1.6 percent from a year ago and have been trending essentially flat for the last 18 months (see second chart).

Just two of the seven major categories shown in the durable-goods report fell in November in nominal terms. Transportation equipment plunged 6.3 percent following three consecutive gains (see third chart). Within the transportation equipment category, nondefense aircraft sank 36.4 percent, defense aircraft lost 8.6 percent, and motor vehicles and parts were off 0.1 percent.

Among the other individual categories, primary metals orders was the other decliner, falling 0.4 percent. Computers and electronic products had 0.6 percent increases, machinery orders gained 0.3 percent, electrical equipment and appliances rose 0.2 percent, the all other durables category rose 0.2 percent, and fabricated metals orders added 0.1 percent.

Durable-goods orders have posted a strong recovery from the lockdown recession measured in nominal dollars. However, after adjusting for price increases, real orders for durable goods and real new orders for core capital goods are rising at very modest trend growth rates in recent months.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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