US November orders for durable goods hurt by fall in machinery & aircraft

FXStreet (Mumbai) – The US Commerce Department today said that the orders for durable goods were unchanged in November after having increased 2.9 per cent in October. Orders were estimated to fall 0.7 per cent. Year to date, durable goods orders have fallen 3.7 per cent.

Factory orders for long-lasting goods such as autos, airplanes and electronics remained flat last month. Demand for autos, electronic products and fabricated metals increased in November. However their gains were offset by declines in machinery and aircraft. 36.9 per cent drop in the aircraft category was the primary reason behind the fall in orders this year. Orders for capital goods not including aircraft fell 0.4 per cent.

Core capital goods orders rose by a revised 0.6 per cent in October as compared to a previous rise of 1.3 per cent. Core capital goods shipments fell 0.5 per cent in November following October’s downwardly revised 1.0 per cent drop.

What has hurt the manufacturing sector?

Strong dollar and struggling global economy continue to weigh on U.S. manufacturers. The ISM index of factory activity in November dropped to 48.6 from 50.1 in October. The index dropped below that critical level for the first time since November 2012.

Slow economic growth in Europe, China and Japan has led the dollar to gain strength. The Fed noted that the dollar has moved up 11 per cent against a basket of currencies in the last on year.

Strong dollar has inflated the value of US produced goods rendering U.S. goods more expensive overseas and thus less competitive. Also, the unsold goods increased inventory. The manufacturing sector has been hurt by the constant struggle to reduce the bloat. New orders growth has also suffered in the process.

On the other hand oil price slump has led to a decline in demand for pipelines and equipment by energy companies.

Orders for motor vehicles and electronics have increased this in large part because of steady demand from domestic consumers. Unemployment has dipped to a healthy 5 percent, prompting many Americans to buy more cars and meals at restaurants.

Overall consumer spending rose 0.3 percent in November, the Commerce Department said Wednesday in a separate report. Those expenditures account for 70 percent of all U.S. economic activity.

The US Commerce Department today said that the orders for durable goods were unchanged in November after having increased 2.9 per cent in October. Orders were estimated to fall 0.7 per cent. Year to date, durable goods orders have fallen 3.7 per cent.

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