Durable Goods Orders Hit Peak Growth

Heading into 2019, expect new orders of durable goods to grow at a slower rate.

New orders for real durable goods in November 2018 totaled $244,576 million. Compared with one year ago, new orders grew just 1.9 percent. This was the fifth consecutive month of growth, but it was the slowest rate of growth since June 2018 and the second slowest since October 2017. While the one-month rate of change grew for the 17th  time in 18 months, the annual rate of growth decelerated to 6.0 from 6.5 percent. This was the slowest rate of annual growth since June 2018.

It seems clear that the rate of growth in new orders of durable goods has peaked and will grow slower heading into 2019. This becomes more likely when looking at the trend of real consumer durable-goods spending, a good leading indicator of real new orders in durable goods. Spending growth has slowed sharply the last couple of months, indicating slowing growth in new orders.

New orders for motor vehicles and parts remained relatively robust, growing 6.6 percent in November compared with one year ago. The annual rate of growth accelerated for the fifth-straight month to its fastest rate since February 2016. 

Aerospace orders, on the other hand, contracted for the second month in a row. November’s new orders fell 14.1 percent compared with one year ago. Still, the annual rate of growth remained relatively strong at 14.1 percent. That was the fourth month in a row of double digit annual growth. But, the rate of annual growth should continue to grow at a slower rate in upcoming months.

Accelerating Growth: construction materials, motor vehicle/parts, off-road/construction machinery

Decelerating Growth: aerospace, construction materials, computers/electronics, durable goods, fabricated metal products, HVAC, machinery/equipment, oil/gas-field/mining machinery, power generation, primary metals, total capital goods

Accelerating Contraction: 

Decelerating Contraction: appliances, ship/boat building

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