Durable Goods Demand Soars
The data is in, and the news is good when it comes to demand for durable goods. The U.S. Census Bureau’s Advance Report on Durable Goods—products like appliances, electronics, vehicles, and other capital goods that enjoy multiple years of use—grew 3.5% in November, an increase of $8.2 billion. This growth actually exceeded economists’ predictions; pundits were looking for a much more modest increase of 1.5% for the month.
November’s durable goods data also aligns with the positive tone of the Federal Reserve’s Industrial Production report, which increased 1.1% for November after expanding just 0.1% in October. Here again, the data surpassed economists’ expectations (+0.6%).
The headline index, comprised of the manufacturing, mining, and utilities industries, is now up 3.2% on the year. The manufacturing industry segment alone increased 0.6% in November and has now increased 2.9% on the year.
The durable goods new order report also confirms the strong outlook that emerged from the Institute for Supply Management’s Purchasing Managers Index. These two indices measure the health of the manufacturing industry in similar ways, and both reached their highest levels since January in November.
Markit chief economist Chris Williamson noted that U.S. manufacturing has continued to grow despite the fiscal uncertainty, economic malaise, and partial shutdown seen in the closing months of the year. “Large companies are leading the upturn, having escaped the impact of the shutdown, with output and new orders growth trending higher in recent months,” he says.