Durable Goods Show Mixed Turnout for January

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If there is one economic report that is the most volatile of them all, it has to be the one on durable goods. These are the longer-lasting big-ticket items bought by businesses and consumers, and they can sometimes show weak readings in strong economies or strong readings in weak economies. After all, this can easily be skewed by airplane orders or other major orders in any given month.

The U.S. Department of Commerce announced on Monday that new orders for manufactured durable goods increased by $4.0 billion (up 1.8%) to $230.4 billion in January. The consensus estimate from Dow Jones was a gain of 2.0%, and Bloomberg’s consensus estimate was 1.8%. While this report is volatile, the headline gain broke what had been two consecutive monthly decreases.

Excluding transportation, January’s flow of new orders was down by 0.2%, but Bloomberg was calling for a gain of 0.5%.

If you look at the year-over-year readings, new orders were down by 0.6% on the all-items headline report, but they were up 2.4% if you back out the transportation orders.

Excluding defense, new orders were up 1.5%. Transportation equipment has driven the increase with a $4.3 billion or 6% gain to $76.4 billion.

Shipments of durable goods were down by $0.2 billion (−0.1%) to $238.3 billion in January, following two consecutive monthly increases. Machinery led the decrease, falling $0.5 billion (−1.6%) to $30.7 billion.

Investors and economists try to break out some of the orders here to see a core reading among the durable goods. This reading was −0.4% on the monthly reading but was up 0.5% on a year-over-year basis.

Other key data was shown as follows:

  • Inventories of manufactured durable goods in January, up two of the past three months, increased $0.1 billion, or virtually unchanged, to $383.8 billion.
  • Nondefense new orders for capital goods in January increased $2.4 billion, or 3.6%, to $69.0 billion.
  • New orders for computers and electronic products were $24.746 billion, versus $25.139 billion in December. Communications equipment fell to $3.759 billion in January from $3.956 billion in December.