Growth in Durable Orders Decelerates in December But Tops Economist Estimates
Data Thursday morning showed U.S. durable goods orders rose 3 percent in December, beating the analyst consensus of a 2 percent gain. The upside was largely drive by an increase in demand for metals, machinery and communications equipment.
The figure for the month of November was revised higher to a 4.3 percent gain.
Booking for machinery experienced its largest increase since last March as demand rose 6 percent. Communication equipment orders hit a new three-month high with a 2.2 percent increase.
Shipments of non-defense capital goods excluding aircrafts rose by 2.9 percent as companies looked to take full advantage of tax breaks, which allow for a 100 percent deprecation on equipment purchased. Companies will only be allowed to depreciate 50 percent in 2012.
Transportation equipment orders grew by 5.5 percent as civilian aircraft orders rose by 19 percent in the month of December. Durable goods orders excluding this volatile sector rose 2.1 percent, better than a reading of 0.9 percent expected by the Street. Notably, Boeing (NYSE: BA) experienced a 199 percent increase in orders for December compared to November.
Demand for U.S. goods continue to show positive signs as emerging economies continue to grow. A pickup in consumer and company spending during the holiday season also contributed to the solid signs. Low inventories and rising consumer and company spending should help production levels remain strong going forward despite weakening market conditions in Europe.
Although figures toward the end of 2011 were strong, durable goods orders for the year only grew by 10 percent, well below the 15.5 percent growth experienced in 2010.
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The figure for the month of November was revised higher to a 4.3 percent gain.
Booking for machinery experienced its largest increase since last March as demand rose 6 percent. Communication equipment orders hit a new three-month high with a 2.2 percent increase.
Shipments of non-defense capital goods excluding aircrafts rose by 2.9 percent as companies looked to take full advantage of tax breaks, which allow for a 100 percent deprecation on equipment purchased. Companies will only be allowed to depreciate 50 percent in 2012.
Transportation equipment orders grew by 5.5 percent as civilian aircraft orders rose by 19 percent in the month of December. Durable goods orders excluding this volatile sector rose 2.1 percent, better than a reading of 0.9 percent expected by the Street. Notably, Boeing (NYSE: BA) experienced a 199 percent increase in orders for December compared to November.
Demand for U.S. goods continue to show positive signs as emerging economies continue to grow. A pickup in consumer and company spending during the holiday season also contributed to the solid signs. Low inventories and rising consumer and company spending should help production levels remain strong going forward despite weakening market conditions in Europe.
Although figures toward the end of 2011 were strong, durable goods orders for the year only grew by 10 percent, well below the 15.5 percent growth experienced in 2010.
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