Economic News Blog
Posted by: Steven Kline, Jr. 5. December 2013

Capital Goods New Orders Contract Slightly in October

According to the Census Bureau, real capital goods new orders in October 2013 were $81,038 million. This is a decrease of 1.2% compared to October 2012. This is the second time in the last four months that the month-over-month rate of growth has been negative. However, the annual rate of change has grown four of the last five months. The general trend still seems to point toward accelerating growth in real capital goods new orders

A good leading indicator for real capital goods new orders is real consumer spending. As consumers spend more on all goods, businesses need more capital equipment to make the goods consumers are buying. Since October 2011, the rate of growth in real consumer spending has been slowly decelerating. There are many historical instances where the current pattern in real consumer spending has led to accelerating growth in real capital goods new orders. Therefore, it looks like the accelerating growth trend in real capital goods new orders should continue.

We use real goods new orders to forecast activity in metalcutting job shops, durable goods, and metalworking.

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