US durable goods orders stabilized in October, while the consensus was looking for a drop by 0.7% M/M. The previous figure was slightly downwardly revised, from 9.9% M/M to 9.2% M/M. The details show weakness in transportation orders, which fell by 3.1% M/M in October due to a drop in orders for motor vehicles and parts (-1.6% M/M) and non-defense aircraft (-5.8% M/M). Durables excluding transportation, on the contrary, proved remarkably strong, increasing by 1.5% M/M, while a limited decline (-0.5% M/M) was forecast. Within the core reading, strength was led by electrical equipment (4.1% M/M) and machinery (2.9% M/M), but orders for primary (1.7% M/M) and fabricated metals (1.1% M/M) and computers and electronics (0.9% M/M) rose too. Shipments of non-defense capital goods less aircraft, which is an important indicator for the GDP data, remained however poor, falling for a fourth consecutive month (by 0.4% M/M). The Commerce Department said that non of the companies surveyed said Sandy had affected output. Recently, US durable goods orders were very volatile, but the underlying trend was poor as firms were reluctant to invest due to uncertainty related to the upcoming fiscal cliff. The October data finally bring some good news, but investments are forecast to remain soft until the fiscal cliff is resolved.
Conference Board’s consumer confidence extended its uptrend in November, rising to its highest level since early 2008. Consumer confidence rose from an upwardly revised 73.1 to 73.7, while a more limited increase to 73.0 was forecast. The labour market differential improved further in November, rising from -28.4 to -27.6, suggesting that improving labour market conditions are brightening consumer sentiment. Together with the improving housing market, it led to a significant improvement in consumer confidence recently, which is an encouraging sign for retailers and suggests that we are heading for a strong Christmas shopping season.
The Richmond Fed manufacturing index showed a remarkable rebound in November. The headline index rose from -7 to 9, while a further weakening was expected and also the details are encouraging. Shipments (11 from -9), new orders (11 from -6) and number of employees (3 from -5) rose significantly, while a more limited increase was seen in vendor lead time (0 from -2) and capacity utilization (-3 from -4). Average workweek (2 from 3) and wages (unchanged at 10) stayed broadly stable compared with the previous month, while order backlog weakened from -3 to -9. Upward price pressures eased in November with prices paid falling from 3.21 to 1.99 and prices received slowing from 1.99 to 1.72. Also forward looking indicators showed signs of improvement. After a temporary setback in October, the Richmond Fed manufacturing index extended its rebound in November, rising to its highest level since April, suggesting that the economic climate remains rather strong despite uncertainty related to the fiscal cliff.