U.S. Durable Goods Orders Tumble Amid Sharp Pullback In Transportation Orders

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Reflecting a sharp pullback in orders for transportation equipment, the Commerce Department released a report on Friday showing U.S. durable goods orders tumbled by much more than expected in the month of November.

The report said durable goods orders plunged by 2.1 percent in November after climbing by a downwardly revised 0.7 percent in October.

Economists had expected durable goods orders to decrease by 0.6 percent compared to the 1.1 percent jump that had been reported for the previous month.

The much steeper than expected drop by durable goods orders came as orders for transportation equipment dove by 6.3 percent in November after jumping by 1.9 percent in October.

Orders for non-defense aircraft and parts led the way lower, plummeting by 36.4 percent in November after soaring by 4.7 percent in October.

Excluding the pullback in orders for transportation equipment, durable goods orders edged up by 0.2 percent in November after inching up by 0.1 percent in October. Ex-transportation orders were expected to be unchanged.

The uptick in ex-transportation orders partly reflected increases in orders for computers and electronic products and machinery.

The report also showed orders for non-defense capital goods excluding aircraft, a key indicator of business spending, crept up by 0.2 percent in November after rising by 0.3 percent in October,

Meanwhile, shipments in the same category, which is the source data for equipment investment in GDP, edged down by 0.1 percent in November after surging by 1.4 percent in October.

"Business equipment investment was probably supported again this quarter from a further recovery in transport, as autos shortages eased," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "But we expect it to weaken more markedly next year as the full impact of the Fed's aggressive tightening this year feeds through."

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