In one of the biggest economic misses that I can recall, the Econoday durable goods consensus was overly optimistic by a whopping 3.9 percentage points after factoring in negative revisions.
Econoday Durable Goods Forecast
Advance Report Details
Let’s dive into the Census Advance Durable Goods Report for more details.
New Orders
- New orders for manufactured durable goods in November decreased $5.0 billion or 2.0 percent to $242.6 billion, the U.S. Census Bureau announced today. This decrease, down two of the last three months, followed a 0.2 percent October increase.
- Excluding transportation, new orders were virtually unchanged.
- Excluding defense, new orders increased 0.8 percent. Transportation equipment, also down two of the last three months, led the decrease, $4.9 billion or 5.9 percent to $79.2 billion.
Shipments
- Shipments of manufactured durable goods in November, up following four consecutive monthly decreases, increased $0.2 billion or 0.1 percent to $251.6 billion.
- This followed a 0.1 percent October decrease. Fabricated metal products, up three of the last four months, drove the increase, $0.3 billion or 1.0 percent to $34.1 billion.
Unfilled Orders
- Unfilled orders for manufactured durable goods in November, down two of the last three months, decreased $4.7 billion or 0.4 percent to $1,159.0 billion. This followed a virtually unchanged October increase.
- Transportation equipment, down following four consecutive monthly increases, led the decrease, $4.6 billion or 0.6 percent to $790.3 billion.
Inventories
- Inventories of manufactured durable goods in November, up sixteen of the last seventeen months, increased $1.8 billion or 0.4 percent to $434.0 billion. This followed a 0.4 percent October increase.
- Transportation equipment, also up sixteen of the last seventeen months, drove the increase, $1.8 billion or 1.2 percent to $149.3 billion.
Capital Goods
- Nondefense new orders for capital goods in November decreased $1.3 billion or 1.8 percent to $71.3 billion.
- Shipments decreased $0.7 billion or 0.9 percent to $74.4 billion. Unfilled orders decreased $3.1 billion or 0.5 percent to $684.3 billion. Inventories increased $1.1 billion or 0.6 percent to $196.8 billion.
- Defense new orders for capital goods in November decreased $5.5 billion or 35.6 percent to $10.0 billion.
- Shipments decreased $0.1 billion or 0.5 percent to $12.8 billion. Unfilled orders decreased $2.7 billion or 1.7 percent to $158.2 billion. Inventories increased less than $0.1 billion or 0.2 percent to $24.3 billion.
Shockingly Bad Report
This was a shockingly bad report in the face of the GM strike that ended on October 25.
Economists expected a huge jump in orders that instead went hugely in reverse.
Yet, inventories are up 16 out of the last 17 months.
This forecast miss is on top of a large miss in new home sales estimates. For details, please see New Home Sales Badly Miss Expectations.
Mike “Mish” Shedlock
How much can the whopping new defense budget offset orders over next 12 months? And troop withdrawals around the globe will also like increase defense purchases by other countries. The new growth model.
This is a recession. They will just not admit that. And as long as they can plaster over disastrous employment figures with a quarter million census bureau hires that are all temporary we will be fine right? The problem of course is that all those quarter million new hires are going to hit the unemployment lines just about election day.
Slow steady economic rot continues into it’s 2nd decade,but hey as long as check from big gov,that handout from big gov.that subsidy from big gov.that paycheck from big gov comes 1st of the month……..who cares!
“Yet, inventories are up 16 out of the last 17 months.”
…
Not quite apples to apples … but …
ytd total new durable orders …. -1.3% vs 2018
year over year (November) total inventories … +4.7%
SOMETHING will have to give.
I think something already did. Boeing has been building 737 Max planes all year, but not delivering any. In dollar terms, that’s a lot of inventory, and it has to be significant. They are shutting down production in January. Once they start delivering them again, we should see inventories trend back towards normal.
True, inventory should decline … but new orders will take a big hit with suspension … if new orders decline greater than inventory??
I am going to guess that those aircraft will be in inventory until they are written off.
The current consensus is that the “soft patch” is over and that due to renewed money printing by central banks the global economy will recover strongly in 2020. Bond yields and stocks are both expected to rise. I think this consensus may turn out to be wrong on all counts. A granular analysis of the recent strong expansion in the money supply reveals that almost none of it is due to growth in commercial bank lending. Business lending is particularly weak and getting weaker. This is a subtle hint that the economy’s pool of real funding may be in trouble and that there is literally nothing left to lend.
For every politician against deficits there is one for them…depending on the year… and who is in charge…
Nothing will matter until the interest rates rise and the cost of servicing the debt hits the bottom line of Government….which may never happen…The entire past 12 years has been nothing more than kicking the can down the road…