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Durable-Goods Orders Declined in November

New orders for durable goods fell 2.1 percent in November, following a 0.7 percent gain in October. Total durable-goods orders are up 10.6 percent from a year ago. The November decrease puts the level of total durable-goods orders at $270.6 billion (see first chart).

New orders for nondefense capital goods excluding aircraft, or core capital goods, a proxy for business equipment investment, rose 0.2 percent in November after increasing 0.3 percent in October. Orders are up 6.4 percent from a year ago, with the level at $75.2 billion.

However, price increases have had an impact on capital goods orders. In real terms, after adjusting for inflation, real new orders for durable goods decreased by 2.4 percent in November, following a 0.4 percent gain in October. Real new orders for nondefense capital goods excluding aircraft gained 0.3 percent after a similar 0.6 percent rise in October (see second chart). Real new orders for capital goods are down 1.6 percent from a year ago and have been trending essentially flat for the last 18 months (see second chart).

Just two of the seven major categories shown in the durable-goods report fell in November in nominal terms. Transportation equipment plunged 6.3 percent following three consecutive gains (see third chart). Within the transportation equipment category, nondefense aircraft sank 36.4 percent, defense aircraft lost 8.6 percent, and motor vehicles and parts were off 0.1 percent.

Among the other individual categories, primary metals orders was the other decliner, falling 0.4 percent. Computers and electronic products had 0.6 percent increases, machinery orders gained 0.3 percent, electrical equipment and appliances rose 0.2 percent, the all other durables category rose 0.2 percent, and fabricated metals orders added 0.1 percent.

Durable-goods orders have posted a strong recovery from the lockdown recession measured in nominal dollars. However, after adjusting for price increases, real orders for durable goods and real new orders for core capital goods are rising at very modest trend growth rates in recent months.

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