The Census Bureau reported today that New Orders for Manufacturers rose by 1.1% in November. This was up from a 0.8% increase in October (which was revised up from 0.6%) and comes on top of a 1.6% increase in September. The increase was much better than the 0.5% expected by the consensus of economists.

Still, even though new orders have been up in five of the last six weeks, including very solid gains in each of the last three, we had dug ourselves a heck of a hole earlier in the year. On a year-to-date basis, new orders are off 19.2% for the first 11 months of 2009 relative to the first 11 months of 2008.

Excluding the volatile transportation industry, orders were up 1.9% in November on top of increases of 1.0% in October and 1.5% in September, but are off 17.9% year to date. The story is similar if one excludes defense orders, which rose 1.1% in November on top of back-to-back 1.5% increases in October and September. Year to date, orders are down 19.8% if one excludes Pentagon orders.

Since on a year-to-date basis total orders are down less than orders excluding defense, it is hard to argue that the current administration is skimping on Defense spending. Indeed, new orders for Defense aircraft are up 6.9% on a year-to-date basis, more than any other industry, although they tend to be very lumpy and have been falling in the last two months — down 4.6% in November and off 11.1% in October — but that comes after a 14.6% increase in September.

Non-Durables Better Than Durable Goods

The real surprise in the data was the strength in orders for non-durable goods, which jumped 1.8% in November on top of gains of 2.2% in October and 1.1% in September. By contrast, orders for durable goods only increased by 0.2% in November after being down 0.7% in October and up 2.2% in September. On a year-to-date basis, orders for durable goods have also fared worse than those for non-durables, down 21.6% versus down 17.0%.  The total durable goods include a lot of industrial items (including jetliners) where orders can be very volatile from month to month.

In recent months the consumer numbers are looking better, but are worse on a year-to-date basis. Consumer durable goods orders rose by 1.7% in November after a rise of 1.7% in October but a 1.4% decline in September. Year-to-date, though, they are down 26.6%.  Consumer non-durable goods orders have been strong recently, with gains over the last three months of 1.9%, 2.9% and 1.2%. Still, on a year-to-date basis they are down 18.0%.

Strength in Iron & Steel, Tech Jumps

There were a few areas that really stood out in the report of industries that appear to be coming back from the dead, as measured by big or persistent increases over the last few months coupled with large declines on a year-to-date basis. Iron and steel mills, meaning firms like Nucor (NUE) and U.S. Steel (X) have seen orders tumble 49.5% on a year-to-date basis, but over the last three months have seen orders rise 4.6%, 1.1% and 3.8% in November, October and September, respectively.

A similar industry is mining machinery, including firms like Joy Global (JOYG) and Bucyrus (BUCY) where orders jumped 11.7% in November — more than reversing a 4.6% decline in October — but which came on top of a 23.5% rise in September. On a year-to-date basis, though, orders are down 36.8%. Given how large and expensive some of the draglines and massive trucks used in the mining industry are, the order patterns there can be very lumpy (sort of like jetliners).

Orders for computers rose by 12.6% in November, following a 0.2% decline in October and a 0.7% rise in September. Year to date, computer orders are down 15.5%. The big jump in November probably means good things for firms like Dell (DELL).

In Conclusion

The rise in new orders, and the breadth of industries reporting increases, is more evidence that the economy is getting back on track, and at least the first half of 2010 could be stronger than many are now expecting. The second half is more of a question mark since by then the stimulus spending will be wearing off, in effect turning into a drag on the economy.

There is also a big potential for a second wave of foreclosures this year, which could derail the recovery. Much will depend on how much of a head of steam the economy can build up over the next few months to be able to power over those potential rough spots.

Read the full analyst report on “NUE”
Read the full analyst report on “X”
Read the full analyst report on “JOYG”
Read the full analyst report on “BUCY”
Read the full analyst report on “DELL”
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