Durable goods orders rose 0.8% in November. Analysts at Wells Fargo, point out that core orders have slowed recently. They see the slowdown raising concerns for the capex outlook as slower global growth and trade tensions may be starting to weigh on US activity.
Key Quotes:
“The latest read on durable goods orders indicates activity is slowing in the factory sector and business investment will be more tepid in the year ahead. Durable goods orders rose 0.8% in December, which was half the expected gain.”
“Core capital goods orders, which exclude the volatile defense and aircraft sectors, were also revised upward in October and are now reported to have increased 0.5% after initially being reported as flat. Nevertheless, core orders signal capital spending is losing momentum. Orders in this category fell 0.6% in December, which puts orders below the expected level even when accounting for the upward revision in October. On a three-month average annualized basis, core orders are down 0.2%””the weakest pace since the start of the year.”
“Shipments in November suggest that current business spending is holding up slightly better. Nondefense capital goods shipments, which feed into the BEA’s estimates of equipment spending in the GDP report, rose 2.4% last month. That more than offsets a drop in October and suggests that equipment spending could strengthen in Q4 from the 3.4% pace in Q3. The weakness in orders, however, suggests the rebound will be short lived.”
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