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Orders for big-ticket items surge

New orders for U.S.-made durable goods surged in November on a jump in civilian aircraft purchases but non-transportation orders slid as defense outlays tumbled, government data showed Friday.
/ Source: Reuters

New orders for U.S.-made durable goods surged in November on a jump in civilian aircraft purchases but non-transportation orders slid as defense outlays tumbled, government data showed Friday.

It was the largest rise in overall durable goods orders since May and trounced economists' forecasts for a rise of 1 percent in orders for expensive items built to last three years or more. Analysts had expected orders outside transportation to climb a matching 1 percent.

The Commerce Department revised October orders upward to an rise of 3 percent from a previously reported 2.2 percent gain.

The overall November number was boosted by a 133.8 rise in non-defense aircraft and parts.

The largest U.S. aircraft maker, Boeing Co. has netted a bumper crop of orders recently, including a substantial Chinese deal last month and billions of dollars worth of orders at the November Dubai Air Show.

Meanwhile, the Commerce Department said motor vehicles and parts orders slipped 5.7 percent while defense aircraft and parts tumbled 44.3 percent. Defense capital goods orders as a whole fell 26.6 percent.

A closely watched proxy for business spending, non-defense capital goods orders excluding aircraft, fell 2.0 percent. That dip gave Treasuries a lift in thin pre-holiday trading.

The euro initially rose against the dollar on the report, although the greenback was little changed against the yen.

"The headline number was much higher than anticipated," said Alex Beuzelin, a senior foreign exchange analyst at Ruesch International in Washington. "However, if you strip out the transport component, the number was a little soft. This number is notoriously volatile."

Machinery orders dropped 1.6 percent and communications equipment orders fell 4.4 percent.

In a potential harbinger of stronger factory production to come, unfilled durable goods orders jumped 3.1 percent -- the biggest increase since June 2000 and the seventh straight monthly gain -- to a record high $621.8 billion.

Richmond Federal Reserve Bank Chairman Jeffrey Lacker in two speeches this week forecast business spending growth to outpace output in 2006.

"Business investment should expand substantially faster than overall output and residential investment should expand more slowly, perhaps even falling in real terms," he said in Washington on Thursday.