New Orders in Durable Goods decreased -0.7% for October 2011. New Orders has declined the last two months and August was barely breathin'. September durable goods were revised dramatically downward and new orders decreased -1.5%.

Manufacturing new orders dropped -2.0%. Electrical appliances, gear decreased -5.2% and communications gear new orders dropped -1.6%. Primary metals new orders increased +3.0% for October. Defense capital goods also plunged -19.8% in new orders.

Core capital goods new orders decreased -1.8%, after increasing 0.9% in September. Core capital goods is an investment gauge for the bet the private sector is placing on America's future economic growth.

For all transportation equipment, new orders dropped -4.8%, but this is volatile nondefense aircraft, which dropped -16.4%. Motor vehicles new orders increased 6.2% and defense aircraft new orders increased 10.2%.

This report again reflects a treading water anemic economy. We are seeing a drop in new orders the majority of the last 9 months with no strong growth to counter.

Core capital goods are a leading indicator of future economic growth. It's all of the stuff used to make other stuff, kind of an future investment in the business meter. Core capital goods excludes defense and all aircraft. Shipments in core capital goods decreased -1.1% and September core capital goods shipments were revised to -1.0%. Machinery is a large part of core capital goods and new orders in machinery for the last three months are +1.6%, -2.4% and -1.9% for October, September August, respectively. This report is not adjusted for inflation.

It's typical for aircraft to vary dramatically, after all who orders up a billion dollar air-o-plane every day? This report is often dramatically revised as well.

To put the monthly percentage change in perspective, below is the graph of core capital goods, monthly percentage change going back to 2000. In January 2009, core capital goods new orders dropped -9.9% and also declined by -9.4% in December 2008.

Inventories, which also contributes to GDP, are at an all time high and up 0.5%. Seven months now inventories have hit record highs since inventories have been tracked via the NAICS system. Core Capital Goods inventories increased +0.6%.

Unfilled orders increased +0.2% with machinery having the largest unfilled orders at +1.5%.

Shipments, which contributes to the investment component of GDP, is up +1.3% for October and September was revised to -0.5%. In October, motor vehicles and parts shipments increased +6.4% and machinery decreased -2.8%.

In core capital goods, shipments decreased -1.1% for October, after a -1.0% September decrease. October is not a good kick off for an approximation and indicator on Q4 2011 GDP growth.

The graph below is core capital goods shipments, quarterly annualized percent change.

Memory help: Q3 is July, August & September, Q4 is October, November & December.

Producer's Durable Equipment (PDE) is part of the GDP investment metric, the I in GDP or nonresidential fixed investment. It is not all, but part of the total investment categories for GDP, usually contributing about 50% to the total investment metric (except recently where inventories have been the dominant factor).

Producer's Durable Equipment (PDE) is about 75%, or 3/4th of the durable goods core capital goods shipments, used as an approximation.

What is a durable good? It's stuff manufactured that's supposed to last at least 3 years. Yeah, right, electronics, laptops and cell phones.