Drop in Aircraft Orders Sink U.S. Durable Goods Orders in December

New orders for durable goods unexpectedly declined 2.2% m/m (-3.9% y/y) in December following a downwardly revised 2.0% m/m decline in November (previously -1.1% m/m) according to the U.S. Census Bureau. This was the fourth monthly decline in orders in the past five months. The Action Economics Forecast Survey had expected a 1.0% m/m increase. Orders for transportation equipment dropped 7.4% m/m, led by a 33.1% monthly plunge in aircraft orders. Excluding transportation orders, the remaining orders rose 0.3% m/m in December, more than offsetting a 0.2% monthly decline in November. For all of the fourth quarter, orders fell 1.8% q/q after having risen 4.0% q/q in the third quarter. Again, transportation orders played a big role. Excluding them, the remaining orders rose 0.7% q/q in Q4, up from 0.4% q/q in Q3. Orders for defense goods were essentially unchanged in December following a 10.9% monthly drop in November.

The decline in transportation orders reflected a 0.2% m/m decrease in motor vehicle orders and a 33.1% monthly plunge in aircraft orders with nondefense aircraft orders plummeting 45.7% m/m. Orders for primary metals fell 0.6% m/m but orders for all other major sectors increased, led by a 1.2% m/m rise in orders for fabricated metal products. Orders for electrical equipment increased 0.3% m/m in December while orders for “other” durable goods rose 0.4% m/m.

Core capital goods orders and shipments (that is, nondefense orders and shipments excluding aircraft) posted solid gains in December with upward revisions to November. Core capital orders were up 0.5% m/m following a 0.9% monthly gain in November. For all of Q4, they rose 0.9% q/q after having been unchanged in Q3. Core capital goods shipments, a reliable coincident indicator of business spending on equipment, increased 0.6% m/m in December, the third consecutive monthly gain. For all of Q4, care capital goods shipments were up 0.7% q/q, auguring a solid rise in business equipment spending in the Q4 GDP report to be released on Thursday, after having declined 0.6% q/q in Q3.

Shipments of all manufactured goods increased 0.7% m/m (+2.0% y/y) in December after a 0.1% monthly gain in December. Transportation shipments increased 2.8% m/m, their first monthly gain in five months. Excluding transportation shipments, the remaining shipments edged up 0.1% m/m, their fifth consecutive monthly increase. Shipments of durable goods increased 0.9% m/m (+2.3% y/y), their first monthly increase in five months. Shipments of nondurable goods rose 0.5% m/m (+1.6% y/y), their third consecutive monthly increase.

Unfilled orders fell 0.5% m/m, their first monthly decline in six months. This mostly reflected a 0.8% m/m fall in unfilled transportation orders. Unfilled orders excluding transportation edged up 0.1% m/m in December.

Inventories of all manufacturing industries rose 0.4% (0.9% y/y) in December, the same monthly gain as in November. Durable goods inventories increased 0.4% m/m while nondurable goods inventories rose 0.3% m/m.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s USECON database. The Action Economics forecast data are in the AS1REPNA database.