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U S Economy
U.S. Durable Orders Drop in November
From the Wall Street Journal of Tue, 23 Dec 2014 11:49:02 EST

WASHINGTON—Orders for big-ticket manufactured goods fell in November, a sign of weaker business spending in the final stretch of the year.

Purchases of durable goods—products like airplanes, cars and heavy machinery that are designed to last at least three years—fell 0.7% in November from the prior month to a seasonally adjusted $242.28 billion, the Commerce Department said Tuesday.

Economists surveyed by The Wall Street Journal had forecast a 3% rise in new orders.

Durable-goods orders have fallen two of the past three months, suggesting that a surge in business spending over the spring and summer may be over. Durable-goods orders rose 0.3% in October and fell by 0.7% in September.

“November durable-goods orders data signaled a weaker handoff into the final quarter of the year,” said Gennadiy Goldberg, U.S. strategist at TD Securities.

A decline in defense-aircraft orders led the decline in November durable-goods orders after helping to buoy them in October. Defense-aircraft orders fell 7.8% last month after surging 43.5% in the prior month.

Outside this volatile category, the November data pointed to weak underlying demand for manufactured goods. Excluding transportation, orders fell 0.4%. Excluding defense, orders fell 0.1%.

Orders for nondefense capital goods excluding aircraft were flat in November from the prior month. This key measure of business spending has sagged in recent months after surging earlier in the year.

Some economists cautioned that durable-goods data tend to be volatile and can experience large revisions. Other data, like the Federal Reserve’s gauge of industrial output, have pointed to healthier demand for manufactured goods.

“Durable orders and shipments growth has been very soft over the last three months but this does not square with other information on the sector,” economists at RDQ Economics LLC said in a note to clients.

For the first 11 months of the year, durable-goods orders are 6.7% higher than they were over the same period last year, reflecting strength over the spring and summer months.

The broader economy expanded at a seasonally adjusted annual rate of 5% in the third quarter, its fastest pace in over a decade, according to revised data released Tuesday by the Commerce Department. Business investment in equipment rose 11% in the period.

Most economists expect growth to downshift in the fourth quarter, reflecting a weak global backdrop, tepid housing demand and slowing investment by corporations. “Businesses are reining in spending in the final months of the year after back-to-back quarters of impressive investment and strong inventory building,” said Sterne Agee economist Lindsey Piegza.

Write to Jonathan House at

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