Durable Goods Orders Fall, Consumer Confidence Declines, Existing Home Sales Rise

- Durable Goods Orders for October fell 8.3% versus estimates of a 5.0% decline and an upwardly revised 8.7% increase in September.
- Durables Ex Transports for October fell 1.7% versus estimates of a .2% increase and an upwardly revised .5% gain in September.
- Consumer Confidence for November fell to 102.9 versus estimates of 106.0 and 105.1 in October.
- Existing Home Sales for October rose to 6.24M versus estimates of 6.14M and 6.21M in September.

BOTTOM LINE: Orders for durable goods fell last month after a surge the prior month, Bloomberg reported. Bookings for non-defense capital goods excluding aircraft, a gauge of future corporate spending, fell 5.1%. However, a survey released earlier in the month from Blue Chip Economic Indicators said business spending will rise 7.8% this year, up from 6.8% last year. Orders for commercial aircraft declined 45% after soaring 198% the prior month. I expect durable goods to bounce back sharply next month.

Confidence among US consumers unexpectedly fell this month, Bloomberg reported. The present situation component of the index declined to 123.6 versus 125.1 in October. The expectations component fell to 89.2 versus a reading of 91.9 in October. The percentage that said jobs are plentiful rose to 25.8% from 25.6% the prior month. I continue to expect consumer sentiment to make new cycle highs over the intermediate-term as housing stabilizes at relatively high levels, energy prices fall further, inflation decelerates, the job market remains healthy and the stock market rises further.

US previously owned home sales unexpectedly rose in October as lower prices and borrowing costs brought more buyers into the market. The median selling price fell 3.5% from a year earlier to $221,000. The number of homes for sale at the existing pace rose to 7.4 months’ worth from 7.3 months in September. Purchases rose 6.4% in the West and were unch. in the Mid-west. They fell 2.9% in the Northeast and 1.2% in the South. I continue to expect the housing market to stabilize at a relatively high level. I expect US economic growth to bounce back to more average levels over the intermediate-term as auto production cutbacks subside and housing subtracts less.