The Census Bureau reports today that new orders for durable goods in November fell 0.7%, following 0.3% growth in October and 0.7% decline in September. Defense order fell 11% in November which, if excluded, meant that nondefense durable goods orders declined 0.1%. The industry detail shows a mixed picture. A couple of bright spots were machinery order rose 0.9% and motor vehicle orders were up 0.2%.
The nondefense capital goods excluding aircraft category, takes out the very long leadtime industries of defense and aerospace and concentrates only on near term capital equipment orders. The November’s report was not encouraging. Nondefense capital goods orders excluding aircraft was flat in November after falling 1.9% in October and dropping 1.1% in September. Year to date through November, nondefense capital goods orders excluding aircraft is up only 5%--a moderate growth rate in sector with very little inflation.
The November durable goods report tempers the optimism coming from reports on industrial production, employment, and Purchasing Managers. MAPI believes that manufacturing will continue to post moderate growth in 2015. Manufacturing industrial production increased about 3.3% in 2014 and we forecast 3.5% growth in 2015. Although the pace of growth in 2015 is only slightly faster, it will exceed the growth rate of the overall economy.