Despite Factory Orders Rising, November Not A Strong Manufacturing Month

November's factory orders report closes the book on what, despite a 1.3 percent headline jump, was not a uniformly strong month for manufacturing. The split between the report's two main components shows a very sizable 1.4 percent gain for nondurable goods -- the new data in today's report reflecting strong demand and higher prices for petroleum and chemicals -- and a 1.3 percent rise for durable orders which is unchanged from the advance report for this component and reflects aircraft gains from November's Dubai Air Show. Now the soft points. Unfilled factory orders remain stubbornly flat, up only 0.1 percent the last two months. And readings on capital goods, though positive in recent data, are in the negative column. Orders for core capital goods (nondefense ex-aircraft) fell 0.2 percent in November which represents a 1 tenth downgrade from the advance reading. And shipments of core capital goods, which will be inputs into fourth-quarter business investment, fell 0.1 percent which is a 4 tenths downgrade. But still there is much more strength than weakness in the report led by a 14.7 percent jump in civilian aircraft orders, a 1.1 percent gain for vehicle orders, a 0.9 percent gain for primary metals and a 1.6 percent increase for furniture orders which is a reminder of the strength underway in the housing sector. Total orders as well as payroll growth in manufacturing have been picking up and though capital goods took a pause in November, the factory sector is on the move, evidenced by a very strong 1.2 percent rise in the month's total shipments. Watch mid-month for the industrial production report and the first definitive indication on December's factory activity.

Recent History Of This Indicator: A jump in aircraft orders fueled a 1.3 percent rise in the durable goods report for November and makes for a 1.1 percent consensus call for total factory orders. But outside of aircraft, durable orders were flat in November and included softness in capital goods data.