US manufactured goods orders bounce on transport boost

Orders of major US manufactured goods surged in November, government data showed on Friday, bolstered by the transportation segment.

New durable goods orders jumped 5.4 percent from October to November to $295.4 billion, the Commerce Department said, significantly higher than analysts had anticipated.

The increase comes as fresh orders of nondefense aircraft and parts surged 80.1 percent from a month ago. Overall, orders of transportation equipment were up 15.3 percent.

But when the transportation sector was excluded, new orders rose just 0.5 percent.

"Boeing received an order from Emirates for 90 aircraft, but we also expect a rebound in the auto component, where orders fell by six percent between August and October, thanks to the UAW strike," said analysts at Pantheon Macroeconomics in a recent note, referring to the United Auto Workers union.

The UAW union reached agreements to end a six-week strike in late October, reaching deals with Detroit's "Big Three" automakers over better pay and working conditions.

"Markets will like the jump in headline durable goods orders, but it will have little immediate bearing on fourth quarter economic growth," Pantheon said.

Analysts added that the key figure from this data set would be nondefense capital goods shipments, excluding aircraft, "which are a direct input to the equipment investment component of GDP."

Rubeela Farooqi, chief US economist at High Frequency Economics, added that business investment and equipment spending slowed in the third quarter, while fourth quarter data pointed to "slightly less positive momentum in shipments."

Higher borrowing costs could weigh on companies, she said, although acknowledging that a lowering of interest rates next year may provide support over time.