November’s reports on durable goods and new home sales

With the major month end reports already released last week, the only widely watched agency reports that were left for release this week were the advance report on durable goods for November and the new residential sales report for November, both from the Census Bureau; in addition, this week also saw the regularly scheduled release of the Chicago Fed National Activity Index (CFNAI) for November, a weighted composite index of 85 different economic metrics, which indicated that the CFNAI increased to +0.56 in November from a negative reading of -0.76 in October, which was revised from the -0.71 indicated for October a month ago….including that revision, the 3 month average of the CFNAI index rose to –0.25 in November from a revised –0.35 in October, which still indicates that national economic activity continued at a pace below the historical trend over those  recent months….this week also saw the release of the Richmond Fed Survey of Manufacturing Activity, covering an area that includes  Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, which reported its broadest composite index fell to -5 in December from -1 in November, suggesting a modest contraction of Fifth District manufacturing…

November Durable Goods: New Orders down 2.0%, Shipments Up 0.1%, Inventories Up 0.4%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for November (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods decreased by $5.0 billion or 2.0 percent to $242.6 billion in November, after October’s new orders were revised from the 0.6% increase to $248.7 billion reported last month to a 0.2% increase to $247.6 billion…year to date new orders are now 1.3% below those of 2017, down from the -0.8% year over year change we saw in this report last month….a reversal of the volatile monthly new orders for transportation equipment was responsible for this month’s decrease, as new transportation equipment orders fell $4.9 billion or 5.9 percent to $79.2 billion, on a 72.7% decrease to $1,942 million in new orders for defense aircraft and a 1.8% decrease to $7,840 million in new orders for commercial aircraft…. excluding orders for transportation equipment, new orders were statistically unchanged, while excluding just new orders for defense equipment, new orders rose 0.8%….at the same time, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, rose by $82 million or by 0.1% to $69,395 million…

Meanwhile, the seasonally adjusted value of November shipments of durable goods, which will be included as inputs into various components of 4th quarter GDP after adjusting for changes in prices, increased for the first time in 5 months, rising by $0.2 billion or 0.1 percent to $251.6 billion, after the value of October shipments was revised from from $251.6 billion to $251.386 billion, now down 0.1% from September, revised from the statistically insignificant increase reported last month…shipments of fabricated metal products accounted for the November increase, as they rose $0.3 billion or 1.0 percent to $34.1 billion, while the value of shipments of transportation equipment was unchanged at $83.4 billion…shipments of nondefense capital goods less aircraft fell 0.3% to $69,070 million, after September’s capital goods shipments were revised 0.1% lower to $69,295 million, now a 0.7% increase from August….

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 16th time in the past 17 months, increasing by $1.8 billion or 0.4 percent to $434.0 billion, after October inventories were revised from $432.0 billion to $432.15 billion, now up rounded to 0.4% from September, rather than the previously reported 0.3% increase…increased inventories of transportation equipment were responsible for the November increase, rising $1.8 billion or 1.2 percent to $149.3 billion on a 1.9% increase in inventories of commercial aircraft…without the increased inventories of transportation equipment, all other durable goods inventories were flat…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but obviously volatile new orders, decreased for the second time in three months, falling by $4.7 billion or 0.4 percent to $1,159.0 billion, after unfilled orders for October were revised 0.1% lower, from $1,164.8 billion to $1,163.7 billion, now a “virtually unchanged increase” from September…a $4.6 billion or 0.6 percent decrease to $790.3 billion in unfilled orders for transportation equipment was responsible for the decrease, as unfilled transportation equipment orders other than transportation equipment were statistically unchanged at $369,213 million…compared to a year earlier, the unfilled order book for durable goods is 2.0% below it’s level of last November, with unfilled orders for transportation equipment 2.8% below their year ago level, largely on a 3.6% decrease in the backlog of orders for commercial aircraft… 

November New Home Sales Reported Higher After October Sales Revised Lower

The Census report on New Residential Sales for November (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 719,000 homes annually during the month, which was 1.3 percent (±11.0 percent)* above the revised October rate at 710,000 new single family home sales annually, and 16.9 percent (±19.4 percent)* above the estimated annual rate that new homes were selling at in November of last year…the asterisks indicate that based on their small sampling, Census could not be certain whether November new home sales rose or fell from those of October, or even from November of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report, sales new single family homes in October were revised down from the annual rate of 733,000 reported a month ago to 710,000, while home sales in September, initially reported at an annual rate of 701,000 and revised to a 738,000 a year rate with the last report, were also revised lower, to a 710,000 a year rate with this report, and while August’s annualized home sale rate, initially reported at an annual rate of 713,000 and unrevised from the initially revised 706,000 a year rate with the last report, were revised to a 708,000 rate with this release.

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which suggested that approximately 52,000 new single family homes sold in November, down from the estimated 55,000 new homes that sold in October and the 56,000 that sold in September…..the raw numbers from Census field agents further estimated that the median sales price of new houses sold in November was $330,800, up from the median sale price of $316,900 in October and up from the median sales price of $308,500 in November a year ago, while the average November new home sales price was $388,200, up from the $377,900 average sales price in October, and up from the average sales price of $367,100 in November a year ago….a seasonally adjusted estimate of 327,000 new single family houses remained for sale at the end of November, which represented a 6.3 month supply at the November sales rate, up from the revised 6.0 months of new home supply in October…for graphs and additional commentary on this report, see the following  two posts by Bill McBride at Calculated Risk: New Home Sales at 719,000 Annual Rate in November and A few Comments on November New Home Sales

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most picked from the aforementioned GGO posts, contact me…)

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