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US Durable Goods Orders Rebound Sharply in November

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US Durable Goods Orders Rebound Sharply in November

Orders for manufactured durable goods rebounded sharply in November, as business investment continued to fuel US recovery after a brief slowdown.

US durable goods orders rose 3.5 percent in November following a 0.7 percent decline the prior month, according to official data from the Commerce Department. Economists polled by Bloomberg forecasted a monthly gain of 2 percent. The monthly report on durable goods is closely watched by market participants. Durable goods data are used to gauge near-term economic activity in the manufacturing industry.

The monthly gains were driven by growing demand for non-military aircraft and automobiles. Bookings for non-military aircraft soared 21.8 percent, with aerospace company Boeing (NYSE:BA) reporting 110 aircraft orders in November, up from 79 the prior month. Auto sales rose 3.3 percent, the fastest rate since February. Compared to year-ago levels, auto sales have increased by 16.3 million, the highest since May 2007, according to Ward’s Automotive Group.

Durable goods excluding transportation equipment rose 1.7 percent in November, following a 0.7 percent gain the prior month. Bookings for transportation equipment are up three of the past four months, rising 8.4 percent in November.

“These are very promising signs for business spending,” said Gennadiy Goldberg of TD Securities USA LLC. “It’s fairly positive for growth prospects in the fourth quarter.”

Shipments of durable goods, which are used to calculate US gross domestic product, rose 2.8 percent in November, the biggest advance since March 2012. US gross domestic product expanded 4.1 percent in the third quarter, according to a third estimate from the Commerce Department.

With job growth accelerating at a rapid pace in the fourth quarter and the Federal Reserve finally deciding to begin reigning in record stimulus, the US economy is poised for a strong run in 2014. The Fed will ease $75 billion into the financial markets beginning in January.

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