New orders for U.S. manufactured durable goods experienced a significant decline in November, far exceeding the initial projections, as highlighted in a report by the Commerce Department released on Monday.
According to the report, orders for durable goods decreased by 1.1% in November, following an upward adjustment to a 0.8% increase in October. Economists had projected a 0.4% decrease in durable goods orders, in contrast to the previously reported 0.3% rise for October.
The more pronounced decrease in durable goods orders was mainly driven by a notable reduction in orders for transportation equipment, which fell by 2.9% in November after a 1.8% increase the previous month.
When excluding the significant drop in transportation equipment orders, durable goods orders showed a slight decrease of 0.1% in November, following a 0.2% increase in October. This was contrary to expectations of a 0.3% rise in orders excluding transportation.
The decline in orders for fabricated metal products and computers and electronic products offset gains in orders for machinery, primary metals, as well as electrical equipment, appliances, and components.
Conversely, the report indicated that orders for non-defense capital goods, excluding aircraft—a critical indicator of business investment—rose by 0.7% in November, following a 0.1% dip in October.
Shipments in this same category, serving as a source data point for equipment investment in GDP, grew by 0.5% in November after a 0.4% increase in October.
"The rebound in core capital goods orders and shipments might be indicative of easing policy uncertainty after the election," commented Michael Pearce, Deputy Chief U.S. Economist at Oxford Economics. He further noted, "We anticipate equipment spending growth to exceed 4% next year, partly due to the spillover effects from the surge in new factory construction and the advancement of AI infrastructure."
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