Durable goodsPantheon Macroeconomics‘The chart shows that orders are running far below the pace implied by the ISM; scope for a hefty rebound, sooner or later.’ — Ian Shepherdson, chief economist at Pantheon Macroeconomics

December durable goods orders data are out, and the numbers aren’t pretty.

Here’s a quick roundup:

  • TOTAL ORDERS: -4.3%, 1.8% expected, previous revised down to 2.6% from 3.5%
  • TOTAL ORDERS EX-TRANSPORTATION: -1.6%, 0.5% expected, previous revised down to 0.1% from 1.2%
  • ORDERS OF NONDEFENSE CAPITAL GOODS EX-AIRCRAFT: -1.3%, 0.3% expected, previous revised down to 2.6% from 4.5%
  • SHIPMENTS OF NONDEFENSE CAPITAL GOODS EX-AIRCRAFT: -0.2%, 0.1% expected, previous revised down to 2.3% from 2.8%

The expiration of investment tax credits at year-end likely boosted November orders. If anything, this would likely have had a positive effect on December orders as well, but the numbers suggest otherwise.

This release does not augur well for the outlook for business investment, which is said to be one of the key missing links in the U.S. economic recovery. Meanwhile, it also dovetails with other weak December economic data releases we’ve seen, like the nonfarm payrolls and new home sales reports (in both, weakness was attributed to bad weather).

“This was a very weak report, and it suggests that the U.S. economy ended the year on very weak footing,” says Millan Mulraine, deputy head of U.S. research and strategy at TD Securities.

“In some sense, the weak tone of this report could take on added significance since it is unlikely to have been due to weather conditions, and in that regards it provides a much cleaner gauge on the underlying tone of domestic economic activity in December.”

S&P 500 futures are about 6 points lower than prior to the release, but are still positive on the day. 10-year U.S. Treasury futures, which were negative before the release, are now up 0.2%, and the yield on the 10-year note is 2.74%, one basis point below yesterday’s close.

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