Aircraft orders up, but energy costs subdue overall growth

As the Commerce Department reported last week that orders for manufactured durable goods surged by 4.4 percent to an all-time high of $223 billion in November, National Association of Manufacturers chief economist David Huether said the good

news was driven by a record $14.8 billion increase in orders for commercial aircraft.

"As in October," Huether began, "the rise in orders last month was principally fueled by orders for aircraft. And since it typically takes months or more to fill aircraft orders, today's news bodes well for production during the first half of 2006. But if we exclude transportation products, November's orders for durables actually fell by 0.6 percent from the previous month - the third decline in as many months - while shipments showed no growth at all.

"Higher energy prices stemming from the hurricane season and fundamental energy supply shortages are clearly having a negative impact on the economy, particularly on the manufacturing sector which accounts for about a third of America's energy usage. We're likely to see subdued economic growth until Gulf energy production is fully back on line sometime in the first half of next year. Given our economy's vulnerability to the inherent volatility of the energy market in the meantime, the Senate's failure this week to authorize exploration and development of oil and natural gas resources in the Arctic National Wildlife Refuge was a missed opportunity to increase domestic energy supplies. A comprehensive, long-term energy strategy depends on a mix of increased exploration, efficiency and innovation.  If not reversed next year, the Senate's refusal to allow ANWR exploration will have negative repercussions for years to come."