Durable Goods Massacre: Plunge To -3.3% From A Revised 5.0% On Expectations Of 0.1%, Inventories Grow For 10 Consecutive Months
And so the downward Q4 GDP revisions begin. "New orders for manufactured durable goods in October decreased $6.8 billion or 3.3 percent to $196.0 billion, the U.S. Census Bureau announced today. This decrease, down two of the last three months, followed a 5.0 percent September increase. Excluding transportation, new orders decreased 2.7 percent. Excluding defense, new orders decreased 2.1 percent." Expectations were for print of 0.1%, with the main culprit for the unexpectedly bad miss being transportation: "Transportation equipment, also down two of the last three months, had the largest decrease, $2.9 billion or 5.2 percent to $52.3 billion. This was led by defense aircraft and parts, which decreased $1.6 billion." Most importantly, new orders declined in every single tracked category. Elsewhere the magic that is artificial growth by inventory restocking, now in its 10th consecutive month, continues: "Inventories of manufactured durable goods in October, up ten consecutive months, increased $1.3 billion or 0.4 percent to $316.7 billion. This followed a 0.7 percent September increase." When the liquidation begins watch out below. Of course, stockpilers will by then be able to sell it to the Fed's QE X.Y bid. While the data will be ultimately good for the final revision for Q3 GDP, it starts Q4 GDP with whimper, just as expected. And should the inventory contraction finally begin, watch out for the November and December data.
Other notable order plunges were the following:
- Machinery: -3.9%
- Business investment: -4.5%
- Computers and electronic products: -7.7%
- Communications equipment: -12.3%
- Defense aircraft and parts: -25.1%
There is no economic growth that can be achieved with a plunge across key categories like those above.