BOOM: KEY DETAIL IN DURABLE GOODS REPORT EXPLODES

boeing 787 dreamliner production (1000p wide)

Photo: Boeing

Durable goods orders data for January are out.Orders decreased 5.2 per cent, worse than expectations of a 4.8 per cent decline.

The drop was led by orders for defence aircraft and parts.

However, nondefense orders excluding aircraft (core capex) rose 6.3 per cent, way above expectations of no growth.

Durable goods orders excluding all transportation equipment rose 1.9 per cent, exceeding expectations of a 0.2 per cent gain.

Shipments of nondefense orders excluding aircraft and parts fell 1 per cent. Economists predicted a 1.3 per cent decline.

December data were revised down across the board, but the revisions don’t even begin to offset the gains observed today.

“The standout within the report is rising demand for capital goods seen as a proxy for future business investment in the economy,” wrote Miller Tabak Chief Economic Strategist Andrew Wilkinson in a note following the release. “The report confirms the improving health of the manufacturing sector, which we continue to feel is helping fuel demand across the remainder of the economy as rising business confidence translates into growth in investment activity.”

The chart below, courtesy of Wilkinson, illustrates the surge in core capex:

January nondefense capital goods orders excluding aircraft and parts

Photo: Miller Tabak

Below is the full text from the release:

New Orders

New orders for manufactured durable goods in January decreased $11.8 billion or 5.2 per cent to $217.0 billion, the U.S. Census Bureau announced today. This decrease, down following four consecutive monthly increases, followed a 3.7 per cent December increase.

Excluding transportation, new orders increased 1.9 per cent. Excluding defence, new orders decreased 0.4 per cent.

Transportation equipment, down three of the last four months, drove the decrease, $14.7 billion or 19.8 per cent to $59.7 billion. This was led by defence aircraft and parts, which decreased $5.1 billion.

Shipments

Shipments of manufactured durable goods in January, down following four consecutive monthly increases, decreased $2.7 billion or 1.2 per cent to $226.1 billion. This followed a 0.5 per cent December increase.

Transportation equipment, down following two consecutive monthly increases, had the largest decrease, $1.6 billion or 2.3 per cent to $64.7 billion. This followed a 0.8 per cent December increase.

Unfilled Orders

Unfilled ordersfor manufactured durable goods in January, down following four consecutive monthly increases, decreased $2.1 billion or 0.2 per cent to $989.2 billion. This decrease followed a 0.8 per cent December increase.

Transportation equipment, also down following four consecutive monthly increases, drove the decrease, $5.0 billion or 0.9 per cent to $582.8 billion.

Inventories

Inventories of manufactured durable goods in January, up fifteen of the last sixteen months, increased $0.7 billion or 0.2 per cent to $374.8 billion. This increase followed a 0.1 per cent December decrease.

Transportation equipment, up 30 consecutive months, drove the increase, $1.1 billion or 0.9 per cent to $115.8 billion.

Capital Goods

Nondefense new orders for capital goods in January decreased $0.1 billion or 0.1 per cent to $72.2 billion.

Shipments decreased $1.2 billion or 1.7 per cent to $70.5 billion. Unfilled orders increased $1.6 billion or 0.3 per cent to $586.2 billion. Inventories increased $1.5 billion or 0.9 per cent to $174.1 billion.

defence new orders for capital goods in January decreased $11.3 billion or 69.5 per cent to $4.9 billion.

Shipments decreased $1.0 billion or 11.6 per cent to $8.0 billion. Unfilled orders decreased $3.1 billion or 1.8 per cent to $168.1 billion. Inventories increased $0.1 billion or 0.2 per cent to $21.5 billion.

Revised December Data

Revised seasonally adjusted December figures for all manufacturing industries were: new orders, $483.4 billion (revised from $484.8 billion); shipments, $483.4 billion (revised from $484.9 billion); unfilled orders, $991.3 billion (revised from $991.7 billion); and total inventories, $614.9 billion (revised from $615.5 billion).

Click here for the full release >

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