US DATA
Indicators of durable goods activity were mixed in the November preliminary report, with headline figures disappointing amid upward revisions to prior data, and core indices beating expectations.
- On the headline durable goods orders figure of -1.1% M/M, the "miss" vs -0.3% expected was offset by an upward revision to the prior growth reading to 0.8% from 0.3%. Transportation equipment - a typically volatile category - led the decline, falling -2.9% M/M, with nondefense aircraft/parts down 7.0%.
- For perspective, the previous 6 months of % M/M nondefense aircraft orders starting in June were: -126.9%, -663.8%, -19.7%, -16.6%, 16.4%, and -7.0%.
- While durables ex-transportation orders likewise missed (-0.1% vs +00.3% expected, 0.2% prior unrevised), there were notable gains in core capital goods data for which orders rose 0.7% (0.1% expected, -0.1% prior upward rev 0.1pp) and shipments were up 0.5% (0.2% expected, 0.4% prior also rev up 0.1pp).
- Cutting through the monthly noise, we are beginning to see some more encouraging signs of bottoming out in durable goods, alongside the stabilization in industry surveys (albet at weak levels).
- We note especially the 3M/3M annualized rates of growth in both core orders (2.1%, fastest in 20 months) and shipments (0.7%, the first positive reading for 8 months).
- While various uncertainties lurk for the coming year, including potential tariffs and disruptions to supply chains, the signs for equipment / durables investment are looking slightly brighter in the underlying data as 2024 comes to a close.
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