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Economy in Brief

Durable Goods Orders Rise, Reflecting Aircraft Rebound
by Peter D'Antonio  February 27, 2017

Durable goods orders increased by 1.8% in January (-0.6% y/y), following a revised 0.8% decline in December. The January rise was close to the Action Economics forecast survey median of 1.6%. Although the headline orders figure jumped, the overall report actually was slightly softer than expected.

The headline rise in orders was more than accounted for by a 6.0% jump in the volatile transportation sector (-6.1% y/y), reflecting a huge bounce in aircraft orders (66.3%). Apart from transportation, orders actually edged down by 0.2% (+2.4% y/y).

Core capital goods orders (which exclude defense and civilian aircraft) edged down by 0.4% (+0.5% y/y) and core capital shipments declined by 0.6% (-0.9% y/y). Orders for computers and electronic products declined by 1.6% (+5.8% y/y) and electrical equipment fell by 2.2% (+0.5% y/y).

Durable goods shipments slipped by 0.1% (+1.5% y/y), and core capital goods shipments declined by 0.6% (-0.9% y/y).

Keep in mind that durable goods figures are erratic and month-to-month variations can be misleading. As a result, it makes sense to look at trends in these series.

Although the January figures were on the soft side, the weakness followed solid gains over the previous six months. For example, even with today's softer report, core capital goods orders and shipments were up 5.3% and 4.0% annualized since the summer.

Also, unfilled orders excluding transportation increased by 0.4% (+2.4% y/y), the seventh consecutive monthly increase. Rising order backlogs suggest that demand for durable goods exceeds production.

Total durable goods inventories remained steady (-0.8% y/y), and increased 0.3% (0.0% y/y) excluding the transportation sector.

The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.

Durable Goods NAICS Classification Jan Dec Nov Jan Y/Y 2016 2015 2014
New Orders (SA, %) 1.8 -0.8 -4.7 -0.6 -0.4 -2.9 4.8
  Transportation 6.0 -4.4 -14.7 -6.1 -0.5 -4.0 6.8
Total Excluding Transportation -0.2 0.9 1.1 2.4 -0.4 -2.3 3.8
  Nondefense Capital Goods 3.6 3.7 -19.8 -6.9 -5.2 -9.6 1.2
    Excluding Aircraft -0.4 1.1 1.7 0.4 -3.4 -3.2 0.8
Shipments -0.1 1.6 0.4 1.5 -0.8 1.1 3.6
Unfilled Orders -0.4 -0.7 -0.3 -1.9 -1.5 -2.4 8.6
Inventories 0.0 -0.1 0.2 -0.8 -1.1 -0.6 5.2
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