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Industryweek 10231 012816durablegoodsjustinsullivan
Industryweek 10231 012816durablegoodsjustinsullivan
Industryweek 10231 012816durablegoodsjustinsullivan
Industryweek 10231 012816durablegoodsjustinsullivan
Industryweek 10231 012816durablegoodsjustinsullivan

US Durable Goods Orders Slump in December

Jan. 28, 2016
New orders dropped 5.1% overall in December — and 1.2% without transportation — with revised drops for November.

New orders for manufactured durable goods slumped for a second consecutive month in December, according to the new report from the Department of Commerce.

New durables goods orders dropped a hefty 5.1% in December following a revised 0.5% fall in November. Excluding transportation orders, which tend to be volatile month-on-month, new orders fell 1.2%, from 0.5% in November (which was previously reported as flat).

The slump in the data was worse than analysts expected, with overall December new orders estimated as being down 0.5% and ex-transportation off 0.1%.

It underlined the long-running weakness in the industry, as manufacturers continue to be hit by a strong dollar that hampers exports and slowing U.S. and global economies.

“The data for December were almost uniformly weak,” MAPI Foundation director of economic studies Cliff Waldman said. “The machinery sector saw new orders tumble by 5.6% after a 2.6% decline in November, possibly indicative of a significant deceleration of investment activity in key parts of the manufacturing supply chain. Adding to these concerns, new orders in fabricated metals fell by 0.5%. While primary metals managed an increase of 0.3%, this came on the heels of a 4.4% decline in November. All these data points paint a picture of a struggling U.S. manufacturing sector.

“Of great concern for the economy as a whole, new orders for non-defense capital goods excluding aircraft, a well-accepted proxy for business equipment investment, tumbled by 4.3% in December after a 1.1% decline in November. Equipment spending has been a weak spot in the U.S. economic growth picture for the past 15 years, and especially so after the 2009 recession. Capital investment weakness has been a major factor impeding a sharper rebound from that deep downturn. The December data possibly point to further weakening even from this sluggish trend.

“The global economic picture has been a distinct negative for U.S. manufacturing performance throughout 2015, producing an elevated dollar and weakness in regions of the globe that matter to U.S. manufacturing profitability. With the short-term outlook for U.S. economic growth now a question mark, the bumpy ride for the factory sector will likely get even bumpier.”

The Department of Commerce is scheduled to report its first estimate of 2015 fourth-quarter economic growth on Friday. Analysts on average expect that growth in the October-December period slowed to an annual rate of 0.9% from 2.0% in the third quarter.

Copyright Agence France-Presse, 2016

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