Economic News Blog
Posted by: Steven Kline, Jr. 6. January 2014

Capital Goods Orders Grow 19.9% in November

According to the Census Bureau, real capital goods new orders in November 2013 were $90,994 million. This is an increase of 19.9% compared to November 2012. This is the fastest rate of month-over-month in capital goods new orders since February 2012. The month-over-month rate of change has grown three of the last four months and six of the last eight months. The annual rate of change has grown five of the last six months and is clearly on a significant uptrend, which indicates accelerating growth. This is a very positive sign for durable goods production in 2014.

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. Also, the rate of growth in consumer spending looks to be bottoming out. Faster growth in consumer spending would indicate further acceleration in the growth of capital goods new orders.

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

 

Comments are reviewed by moderators before they appear to ensure they meet Gardner Business Media’s submission guidelines.
blog comments powered by Disqus