Durable Goods Manufacturing Up in the U.S.

The numbers for November are finally coming together, and while manufacturing overall dropped by almost a half a percentage point, those declines were almost exclusively in the auto parts industry and may have reflected a shorter workweek in factories during holiday months. Although most sectors were down compared to the rest of the year, at least slightly, one part of industry was up—signaling good things for the U.S. manufacturing core.

A tax break for companies ordering core capital goods—all heavy non-defense equipment, with the exception of aircrafts—has been surging because companies are allowed to write off any of these purchases until the end of 2011. As the year comes to a close, companies have been getting their final orders in before the end of the tax break window.

Additionally, the U.S. manufacturing of commercial aircrafts rose substantially in November.  Demand for aircrafts and similar products, considered durable goods,  rose as much as 2 percent in November after falling slightly in October.

Despite some decreases in volatile industry such as automotive manufacturing and auto parts manufacturing, overall the market has been expanding slowly but steadily in the past year, according to the Institute for Supply Management, an organization who monitors manufacturing trends and produces an index of production month to month.

Increases are welcome after some industries saw slowed production due to parts disruptions coming from the natural disasters in Japan earlier this year and the general economic slump the U.S. has been facing since earlier in the 2000’s.

Sustained production in all industries would be a good sign, not just for the manufacturing sectors but also for the U.S. recovery as a whole, because production of parts and manufactured good signals demand from the U.S., as well as other countries investing in U.S. exported goods.


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