MAPI Analysis on Durable Goods: Business Equipment Production Stronger Than Consumer-Related Industries

The following is an analysis from Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance for Productivity and Innovation (MAPI) regarding the durable goods report from October 2011:

“The U.S. Bureau of the Census reported that durable goods new orders fell 0.7 percent
in October.  Defense capital goods new orders fell 19.8 percent in the
month and civilian aerospace new orders plummeted 16.4 percent,” Meckstroth
said. “Excluding these very volatile and long lead-time sectors, nondefense
capital goods excluding aircraft new orders dropped 1.8 percent in
October.  The October decline in nondefense capital goods excluding
aircraft new orders followed 0.9 percent gains in both September and
August.  Capital goods order activity in October was disappointing and the
up and down movement reflects the uncertainty that exists in the economy. 

“Business equipment production growth, though, is still much stronger than in consumer-related industries,” he added.  “Year-to-date, nondefense capital goods excluding aircraft new
orders are up 11 percent versus one year ago.  Firms are investing in new
equipment for repair, replacement, and productivity enhancing reasons. 
The sluggish pace of overall U.S. economy growth, however, dampens and
lengthens that capital expansion cycle.”