Durable Goods Orders Increase Three Percent

Date: November 30, 2015

October Orders Beat Analysts’ Expectations Due To Rise In Aircraft Demand

The Commerce Department reported that durable goods orders were up 3 percent in October. Economists had expected an increase of 1.7 percent, according to the AP. Orders for nondefense capital goods excluding aircraft, a category viewed as a proxy for business investment, were up 1.3 percent, beating forecasts of a 0.4 percent increase. The orders were up strongly, “led by a surge in demand for commercial aircraft but reflected widespread gains in a number of categories, from machinery to computers.” But in a reflection of the “struggles manufacturers have faced this year, total orders for durable goods, items expected to last at least three years, were down 4.2 percent for the 10 months ending in October, compared to the same period a year ago.” Reuters reports the strong showing for nondefense capital goods excluding aircraft suggest manufacturers have weathered the worst of the impact of the strength of the dollar and retrenchment by energy firms.

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. Bloomberg News reported that the “persistent strength in the U.S., thanks in part to a consumer who has benefited from a better job market, may be encouraging companies to spend more on new equipment after years of underinvestment.” However, the Wall Street Journal reported that IHS Global Insight economist Michael Montgomery said, “Drag from imports and exports should begin to wane as 2016 progresses, but it will be better like hitting one’s finger less frequently with a hammer is, rather than ‘happy days are here again.’” Small businesses in the manufacturing sector in particular are likely to continue experiencing growth in fits and starts in the near future, however, without government addressing broader economic policy issues.

Additional Reading

NFIB previously reported on durable goods spending.

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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