Orders for manufactured goods rose 1 percent in October, the Commerce Department said Friday.

That beat the consensus estimate for a 0.4 percent rise and has led to lots of cheery headlines about the economy recovering despite the disappointing jobs numbers in November. The estimated decline in durable goods orders was moderated from 0.5 percent to 0.4 percent.

Unfortunately, the news is considerably less positive than the headlines suggest. Once inflation is taken into account, it appears that real durable goods orders declined in October.

If we look at the Bureau of Labor Statistics’ ‘Processed Goods for Intermediate Demand’ price index, we find that prices of factory goods jumped 2.1 percent in October. This suggests that when measured in terms of the quantity of output, factor orders declined 1.1 percent in October. And inflation-adjusted durable goods orders fell 2.5 percent.

The same goes for shipments. The dollar value of shipments in October rose 1.6 percent. That too is less than the increase in prices, suggesting that fewer goods were shipped in October than the month prior.

In other words, the October growth was largely an illusion created by inflation. Adjusted for price changes, factory activity slowed in October.