Thursday, January 28, 2016

Durable Goods Tumble

U.S. statistics released this morning show a surprising decline in factory durable goods orders in November and December. From USA Today:

Orders for manufactured durable goods such as autos, computers and electrical equipment tumbled 5.1%, far more than the 0.7% decline economists expected. And November's flat reading was revised to a 0.5% drop.

It is a similar story in South Korea, which exports manufactured goods especially to China and the United States. From a closer look at the statistics it is clear that businesses and households alike in multiple countries are cutting back on purchases of most kinds of manufactured goods, and mostly not out of a sense of austerity, but in an adjustment to the changing nature and purpose of manufactured goods.

U.S. December activity was affected by mild weather, which dampened demand for winter items and Christmas gifts.

The U.S. durable goods report comes after four straight down days in China stocks which has seen the Shanghai Composite fall 10 percent.

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