New orders for key U.S.-manufactured capital goods saw significant growth in November, bolstered by strong demand for machinery and signaling a robust economy as the year comes to a close. According to a report from the Commerce Department, shipments of these goods also experienced an uptick for the second consecutive month, following encouraging consumer spending data reported last week.
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The resilient performance of the economy has prompted the Federal Reserve to adjust its projections for interest rate cuts in 2025. Core capital goods orders, excluding defense and aircraft, climbed 0.7% after a slight dip of 0.1% in October, surpassing Reuters’ economists’ forecast of a 0.1% increase. Concurrently, shipments of these goods rose 0.5% following a 0.4% increase in the previous month, highlighting a sustained business investment trend.
While machinery orders experienced a substantial jump of 1.0%, contrasting declines were observed in sectors such as computers and electronic products. Specifically, the transportation equipment orders dropped 2.9%, heavily influenced by a 7.0% decrease in commercial aircraft orders, as reported by Boeing’s reduction from 63 to 49 orders in October.
The decline in aircraft orders poses concerns for business spending in equipment moving into the fourth quarter. Stephen Stanley, chief U.S. economist at Santander US Capital Markets, remarked on potential repercussions but noted that the strong rise in core capital goods orders could mitigate some negative impacts. Despite these challenges, the Atlanta Fed’s forecast for the fourth quarter GDP growth remains optimistic at 3.1%, matching the third quarter’s performance.