Durable Goods Orders Bounce Back, Consumer Confidence Jumps, New Home Sales Hit Another Record

- Durable Goods Orders for October rose 3.4% versus estimates of a 1.5% increase and a 2.0% decline in September.
- Durables Ex Transportation for October rose .3% versus estimates of a 1.0% increase and an upwardly revised .2% decline in September.
- Consumer Confidence for November rose to 98.9 versus estimates of 90.2 and a reading of 85.2 in October.
- New Home Sales for October rose to 1424K versus estimates of 1200K and 1260K in September.

BOTTOM LINE: US durable goods orders rose more than forecast in October as the Gulf Coast region recovered from two hurricanes, suggesting demand will encourage more production and help power the economy, Bloomberg said. Unfilled orders rose for a fifth straight month, which likely indicates pent-up demand and production increases into early next year. Bookings for commercial aircraft soared 50.4%. Bookings for non-defense capital goods excluding aircraft, a gauge of future business spending, rose 1.3%. Durable Goods Orders will remain healthy over the intermediate-term on hurricane-rebuilding and orders related to the highway bill.

Consumer confidence rose in November by the most in more than two years as falling gasoline prices encouraged shoppers before the start of the holiday season, Bloomberg reported. The component of the index that tracks consumers’ expectations for the next six months soared to 88.8 from 70.1, the biggest gain since April 2003. As well, the component of the index that measures consumers’ present situation jumped to 114 from 107.8, the largest gain since December 2004. The percentage of consumers that said jobs were hard to get fell to 23.2 from 25.3% the prior month. The percentage of consumers expecting to buy a home increased to 3.1% from 2.8% and the percentage that plan to purchase a major appliance rose to 29.1% from 25%. Retail spending on Visa credit and debit cards surged 11% the two days after Thanksgiving. As I predicted a couple of months ago, consumer sentiment is rebounding sharply. This trend should continue into at least early next year.

US new home sales unexpectedly rose to a record last month, surging the most since 1993, suggesting people bought houses in anticipation of higher mortgage rates, Bloomberg reported. The median price of a new home rose .9% to $231,300. The supply of new homes at the current sales pace fell to 4.3 months from 4.7 months in September. Sales rose 47% in the West, 43% in the Northeast and 1.9% in the South. Sales fell 9.5% in the Midwest. This is just more evidence that the housing market is just slowing not collapsing.