Durable Goods Improvement Depends in Belief in New Normal in November 2010

Whether durable goods improved month-over-month (MoM) in November 2010 depends on your belief in a new normal.   US Census called a decline in new orders – their headline:

New Orders.  New orders for manufactured durable goods in November decreased $2.6 billion or 1.3 percent to $193.7 billion, the U.S. Census Bureau announced today. This decrease, down three of the last four months, followed a 3.1 percent October decrease.  Excluding transportation, new orders increased 2.4 percent. Excluding defense, new orders decreased 2.3 percent.  Transportation equipment, also down three of the last four months, had the largest decrease, $6.2 billion or 11.9 percent to $45.5 billion. This was due to nondefense aircraft and parts, which decreased $6.6 billion.

Shipments. Shipments of manufactured durable goods in November, also down three of the last four months, decreased $0.7 billion or 0.3 percent to $195.8 billion.  This followed a 1.0 percent October decrease.  Transportation equipment, down four consecutive months, had the largest decrease, $1.6 billion or 3.3 percent to $46.5 billion.

Unfilled Orders. Unfilled orders for manufactured durable goods in November, up ten of the last eleven months, increased $3.4 billion or 0.4 percent to $825.7 billion. This followed a 0.7 percent October increase.  Machinery, up ten consecutive months, had the largest increase, $2.1 billion or 2.0 percent to $106.3 billion.

Durable goods are a subset of manufactured products that can be used for several years such as refrigerators, airplanes and cars.

Econintersect continues to observe that the quantitative methods being used to create the seasonally adjusted data have been corrupted by the data within the Great Recession and the recovery.  Econintersect evaluates unadjusted data.

Econintersect’s evaluation of durable goods last month (analysis here) saw the data as flat at best.  This month, there was a New Normal split – the data was improved when compared to the last two years, and declined looking at the pre-recession years.

But what we can conclude is that there is a general trend in the YoY data – new orders are becoming less good YoY.

Durable goods unadjusted unfilled orders did NOT improve this month – however the decline was slight and not indicative of more than a one month wobble.   The unfilled orders had a three month up trend which was broken by the November data.

This month the big drag on durable goods was civilian aircraft.  There were no upside surprises in the data.

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