Durable Goods Orders Better Than Expected In November

Date: December 24, 2015

Level Of Orders Unchanged For Month

Durable goods orders were unchanged in November, according to the Commerce Department. Economists had expected a 0.6 percent decrease, the Wall Street Journal reported. Orders for capital goods excluding aircraft, viewed as a proxy for business investment, were down 0.4 percent. Over the year to date, orders have fallen 3.7 percent. Analysts said the strong dollar and slowing economic growth abroad have been a drag on demand for durable goods in the US. IHS Global Insight economist Michael Montgomery said, “Drag from losing business to imports and losing export sales to weak economies abroad and foreign competitors has zapped the strength from manufacturing. With orders reports like this one, that strength will not return for months.” Bloomberg News reported the new data show businesses “began tempering new investment after a third-quarter surge.” The pause in equipment orders “represents one of several challenges facing American producers, who are contending with a strong dollar, tepid overseas demand and a recent inventory overhang.” The AP attributed weakness in durable goods orders to the strong dollar and global economic weakness. High Frequency Economics economist Jim O’Sullivan said, “The manufacturing sector still looks fairly weak – weaker than non-manufacturing, reflecting more exposure to declining exports, a plunge in oil-related investment and an inventory cycle” where wholesalers are cutting inventories.

What This Means For Small Businesses

The latest Commerce Department data suggest that challenges remain for the US economy as it struggles to regain ground, but that some progress has been made. Still, small businesses in the manufacturing sector in particular are likely to continue experiencing uneven growth in the near term without government addressing broader economic policy issues.

Additional Reading

Reuters also reported the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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