November 23, 2022 | 09:20
Lift Me Up… On Durable Gains
U.S. durable goods orders climbed 1.0% in October. That was better than expected and extended gains for a third straight month. Transportation jumped 2.1% on greater aircraft bookings while orders for motor vehicles and parts edged up.
Most components also posted modest gains. Excluding transportation, orders rose 0.5%, partially unwinding the prior month’s 0.9% drop. Machinery rebounded 1.5%, while electrical equipment/appliances gained 0.4% and computers jumped 4.7% to the highest level since June 2016.
Still, in a separate report, initial jobless claims jumped by 17k to 240k in the November 19 week, on a raft of layoffs in the tech sector. Meantime, continuing claims, which include those who have already received unemployment benefits for more than a week, rose by 48k to 1.55 million in the November 12 week, the highest since March. We’ll be closely watching next Friday’s jobs report for any signs of easing conditions in the broader labour market. We expect payroll gains to moderate to 200,000 in November (from 261,000 in October), while the jobless rate will likely rise slightly to 3.8%, an eight-month high.
Bottom Line: Despite tighter financial conditions, durable goods orders climbed more than expected in October. A rebound in core capital goods orders suggests that demand for business equipment remains healthy... for now.