Spencer Platt, Getty Images
Industryweek 24877 092717 Durablegoods Spencerplatt
Industryweek 24877 092717 Durablegoods Spencerplatt
Industryweek 24877 092717 Durablegoods Spencerplatt
Industryweek 24877 092717 Durablegoods Spencerplatt
Industryweek 24877 092717 Durablegoods Spencerplatt

US Business Equipment Orders Drop; Durable Goods Bookings Rebound

Dec. 21, 2018
The third decline in four months for business-equipment orders may add to concern that corporate investment and factory activity are at risk of slipping into a more pronounced slowdown.

Orders placed with U.S. factories for business equipment fell in November, missing forecasts for an increase and adding to signs that demand is slowing amid risks from the trade war with China.

Non-military capital-goods orders excluding aircraft -- a proxy for business investment -- dropped 0.6%, after an upwardly revised 0.5% increase the prior month, Commerce Department figures showed Friday. The Bloomberg survey median called for a 0.2% gain. Bookings for all durable goods, a broader measure of items meant to last at least three years, rebounded by less than expected.

Key Insights

The third decline in four months for business-equipment orders may add to concern -- reflected in plunging stock markets -- that corporate investment and factory activity are at risk of slipping into a more pronounced slowdown. The tumble in oil prices may also be weighing on energy-industry spending.

Figures used to calculate gross domestic product also showed a loss of momentum: Shipments of non-military capital goods excluding aircraft fell 0.1%, also missing estimates for a gain, after an upwardly revised increase.

Federal Reserve policy makers this week lowered their projected path of interest-rate hikes as companies grapple with uncertainty on tariffs, at a time the boost from tax cuts is set to fade. The broader durable-goods numbers reflect swings in the volatile transportation category, with rebounds in orders for both civilian and military aircraft and parts.

Separate data had showed Boeing Co.’s aircraft orders surged in November from the prior month. A separate report Friday from the Commerce Department showed third-quarter GDP grew at a 3.4% annualized rate, revised from 3.5% and still amounting to the fastest two-quarter growth performance since 2014. That reflected downward adjustments to consumer spending and net exports, which was pegged at the biggest drag since 1984.

More Data

November’s three-month annualized gain for business-equipment shipments slowed to 1.9% from 4.2%, while for orders it turned to a 0.2% drop after a 3.5% increase, indicating a reversal of momentum.

Durable-goods orders rose 0.8% following a 4.3% decline. Excluding transportation-equipment demand, which is volatile, orders fell 0.3%.

Bookings for civilian aircraft and parts rose 6.7%; defense capital-goods orders climbed 15.4%, the most since August.

Orders for machinery fell the most since March, and they also declined for electrical equipment, appliances and components as well as motor vehicles and parts.

Primary metals, fabricated metal products and communications equipment showed gains.

The GDP report showed nonresidential fixed investment -- which includes spending on equipment, structures and intellectual property -- grew at an unrevised 2.5% pace in the third quarter. That followed a second-quarter advance of 8.7%.

By Shobhana Chandra

Popular Sponsored Recommendations

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

3 Best Practices to Create a Product-Centric Competitive Advantage with PRO.FILE PLM

Jan. 25, 2024
Gain insight on best practices and strategies you need to accelerate engineering change management and reduce time to market. Register now for your opportunity to accelerate your...

Transformative Capabilities for XaaS Models in Manufacturing

Feb. 14, 2024
The manufacturing sector is undergoing a pivotal shift toward "servitization," or enhancing product offerings with services and embracing a subscription model. This transition...

Shifting Your Business from Products to Service-Based Business Models: Generating Predictable Revenues

Oct. 27, 2023
Executive summary on a recent IndustryWeek-hosted webinar sponsored by SAP

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!