Durable Goods Spending Growth Weakens for Third Month

Low interest rates have helped boost durable goods spending as a percent of total consumer spending, but further deceleration in the rate of growth is ahead.

In November, the month-over-month rate of growth for durable goods spending was 3.8 percent, which was the third month in a row that the growth rate was below the historic average of 5.5 percent. November’s rate of growth was the slowest since March 2016. The annual rate rate of growth was 5.9 percent, decelerating for the third straight month. This was the slowest rate of annual growth since February 2017. 

Low interest rates have helped boost durable goods spending as a percent of total consumer spending, but further deceleration in the rate of growth is ahead. Expect durable goods spending growth to slow through the first quarter of 2019. Beyond that, the trend in the growth rate will depend on whether or not the change in the 10-year Treasury rate breaks up or down out of its current flat trend.

Below are key spending categories that lead the most important manufacturing new orders and production indices.

Accelerating Growth: food/beverage, other non-durable goods, total consumer

Decelerating Growth: air transportation services, appliances, clothing/footwear, durable goods, electronics, medical care, motor vehicles/parts

Accelerating Contraction: pleasure boats

Reports

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World Machine Tool Survey

An independent annual survey that collects statistics from machine tool consuming and producing countries and compares them in real U.S. dollars.

Capital Spending Survey

An annual survey that collects statistics regarding budgeted spending on machine tools, testing equipment, software and more.

Gardner Business Index

A diffusion index measuring month-to-month changes in activity at durable goods and discrete parts manufacturing facilities.