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Economic Report: U.S. durable-goods orders cool in November after rising for 8 months

The numbers: Orders for durable goods increased 2.5% in November, the U.S. Commerce Department said Thursday.

Economists had forecast a 1.5% gain in orders for durable goods, which are products made to last at least three years.

Orders for October were revised up to a 0.4% gain from the prior estimate of a 0.4% decline.

A key metric, core capital goods orders which exclude volatile sectors like transportation and defense, declined 0.1% in November. That’s the first decline since February.

Key details: Orders in November were pushed higher by a 6.5% jump in civilian aircraft orders, which can be volatile. Excluding transportation, orders were up 0.8%.

Core shipments, which are what goes into the GDP calculation, rose 0.3% in November.

Big picture: A dip in core durable-goods orders could be a signal of flagging business investment. 

“Orders in the core category were -0.1% vs. +0.7% expected — undermining fourth quarter growth assumptions on the margins,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, in a note.

Still, core orders had risen for eight straight months and remain 21% above their pre-COVID levels.

What are they saying: “Looking ahead, strong demand and enduring supply-chain challenges will encourage businesses to continue ramping up investment in 2022. It’s too early to tell how Omicron will affect business sentiment and capital expenditure plans. There are upside risks if the variant spurs stronger durable goods demand, but downside risks can’t be completely ruled out,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.

Market reaction: Stocks DJIA, +0.57% SPX, +0.68% were trading higher on Thursday in light holiday volume on optimism that omicron might not derail the global economy.

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