Orders Decline 0.2%, A Sign Q4 GDP May Be Weaker Than Anticipated
According to the latest full report from the Commerce Department, factory orders declined by 0.2 percent in November to $472.2 billion. November’s decline follows a 1.3% increase in October. Despite the decline in overall orders, shipments rose in November after four months of declines, increasing by $1 billion, or 0.2%, to $475.3 billion after a 0.7% decline in October. Unfilled orders also rose in November, increasing by 0.2% to $1.19 trillion. Meanwhile, the ratio of unfilled orders to shipments fell from 6.96 in October to 6.92 for November, and inventories continued their months of declines, falling by 0.3% to $641.3 billion. The inventories to shipments ratio was also down, falling to 1.35 from 1.36 in October. November’s overall factory order results were in line with economists’ forecasts and the third decline in the last four months, according to Reuters. Orders for nondefense capital goods excluding aircraft, which analysts view as a proxy for business investment plans, fell 0.3 percent. The factory orders report, in conjunction with lower construction spending and exports, suggest fourth quarter GDP growth may be weaker than anticipated. The AP reported that durable goods orders “were flat after a 2.8 percent increase in October,” while nondurable goods orders “fell 0.4 percent in November after dropping 0.2 percent in October.”
What This Means For Small Businesses
As the new year begins, there are troubling indicators that the end of 2015 saw continued stagnation, and in some cases setbacks, for growth. Economic conditions are uneven, which will do little to alleviate the uncertainty small business owners feel. As NFIB Chief Economist William Dunkelberg said in the Wall Street Journal recently, “Our guys are in maintenance mode This recovery still stinks.”
MarketWatch 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.