Durable Goods Orders Up Sharply

Durable goods orders rose much more than expected last month. The gain followed a slight December decline that was revised from a slight gain. Consensus expectations had been for a 1.0% rise.

The rise in durable orders caught up with the sharp improvement in the ISM orders index in December. That index fell in January but remained at a fairly high level. During the last ten years there has been a 47% correlation between the annual change in orders for durable goods and the level of the ISM orders index.

Higher orders for motor vehicles and parts, up 10.7%, accounted for much of the January strength in durable orders, but aircraft & parts orders fell sharply. Orders excluding all transportation equipment rose 2.5% (4.3% y/y) following a 1.0% December gain.

Orders for nondefense capital goods were strong for the second consecutive month. Capital goods orders excluding aircraft and parts rose 5.4% (3.8% y/y) following a downwardly revised December, now off 0.6%. These orders fell 3.0% in November.

Orders for computers and electronic products surged for the second consecutive month, up 3.2% (2.9% y/y). Machinery orders also posted a strong 5.3% (3.6% y/y) gain. Orders for electrical equipment rose 0.8% (5.6% y/y) following a downwardly revised December.

Shipments of durable goods rose 3.5% (0.6% y/y) and recouped most of the decline over the prior two months. Shipments excluding all transportation categories have been firmer of late and rose 1.9% (+1.9% y/y) following two months of slight decline.

Durable inventories fell 0.1% (-3.4% y/y) following the 0.9% December gain. Excluding all transportation, inventories fell 0.2% (-4.0% y/y).

Initial claims for unemployment insurance rose unexpectedly last week from an upwardly revised level the week prior. Claims rose 2.7% from the prior week's level and are at the highest level since early December.

The four-week moving average of initial claims rose to 399,750 (2.5% y/y).

Continuing claims for unemployment insurance fell 1.3% from the prior week's level which was revised down. The claimant level so far in February is up 2.5% from January.

The insured rate of unemployment was stable at 2.7%.

Sales of new single family homes were weaker than expected last month. Sales fell 15.1% from December's record level which was revised slightly lower. It was the lowest level for new home sales since last January. Consensus expectations were for a 1.050 Mil. sales rate in January.

Sales fell in each of the country’s regions, except in the Northeast. Sales in the Midwest fell 42.2% m/m (-9.4% y/y). Sales in the South fell 12.9% (4.1% y/y). In the West sales fell moderately for the third month (21.3% y/y). Sales in the Northeast rose 43.4% (-5.7% y/y).

The median price of a new home fell 5.2% to $182,300 (-2.6% y/y).

The new home sales data reflect current sales versus the existing home sale figures which reflect closings on past sales.

The Conference Board's National Index of Help-Wanted Advertising rose in January, but only back to the depressed levels of October and November.

The proportion of labor markets with rising want-ad volume improved to 47% from a downwardly revised 41% in December, originally reported at 47%.

The changes in want-ad volumes were quite mixed across the country's regions.

During the last ten years there has been a 66% correlation between the level of help-wanted advertising and the monthly change in nonfarm payrolls. The correlation with the y/y change in employment has been 92%.

All of the figures mentioned above are seasonally adjusted.