MAPI Analysis on Durable Goods: No Cheer This Holiday Season
The following is an analysis from Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI, regarding the industrial production report for November 2008.
“Manufacturing durable goods orders declined 1 percent in November 2008 after dropping 8.4 percent in October,” Meckstroth said. “The very volatile and long-term aerospace orders declined sharply in the month. An important driver of business equipment investment, nondefense capital goods orders excluding aircraft, managed to increase 4.7 percent in November following a 6.6 percent decline the previous month. If nondefense capital goods orders excluding aircraft remain unchanged in December, that would mean equipment orders fell at a 24 percent annual rate in fourth quarter 2008—an indicator of a severe recession.
“Unfortunately, there is no cheery news about the state of manufacturing this holiday season,” he added. “A dark cloud of pessimism has settled over the economy. The markets for big-ticket consumer goods, like housing-related goods and automotive products, have collapsed as pink slips rain from nearly every private sector industry. And as the durable goods report shows, businesses are cutting back on capital investment in response to low and falling operating rates.”