U.S. Durable Goods Orders Surprise to Upside in January

Manufacturers' new orders for durable goods rose a much larger-than-expected 1.6% m/m (+16.5% y/y) in January. The Action Economics Forecast Survey was expecting a 0.6% m/m increase. The initially reported 0.9% m/m fall in December was revised up markedly to a 1.2% m/m increase. The revision to December was due mostly to a large upward revision to transportation orders with the initially reported 3.9% m/m decline revised to a 1.7% m/m increase. Excluding transportation, orders were up a more modest, but still solid, 0.7% m/m in January following an upwardly revised 0.9% m/m gain in December (initially reported as +0.4% m/m).

A 3.4% m/m (+29.4% y/y) increase in transportation orders (largely nondefense aircraft orders) led the January increase in total orders. This was the third consecutive monthly increase in transportation orders, which have risen 13.8% over this period. Orders for motor vehicles and parts slipped 0.4% m/m in January, their first monthly decline in the past four months, while orders for defense aircraft plunged 41.1% m/m on top of a 21.9% m/m decline in December. By contrast, orders for nondefense aircraft jumped up 15.6% in January, their third consecutive double-digit monthly increase. Apart from transportation orders, orders in other sectors were little changed except for a 2.3% m/m increase in machinery orders.

Durable goods shipments rose 1.2% m/m (+9.6% y/y) in January following an upwardly revised 1.3% m/m gain in December (initially reported as 0.8% m/m). In contrast to orders, transportation shipments did not play a leading role in the overall January gain. They were up only 0.3% m/m in January after a 1.6% m/m rise in December. Excluding these, other shipments rose 1.5% m/m in January on top of a 1.2% m/m increase in December. Meaningful increases were spread across major sectors. Fabricated metal products shipments rose 1.6% m/m; machinery shipments jumped up 2.7% m/m; and shipments of computers and electronic products rose 1.3% m/m as did shipments of electrical equipment and appliances.

This report now contains an advance reading on shipments of nondurable goods. They increased 1.3% m/m (13.1% y/y) following an upwardly revised 0.2% m/m increase in December (initially -0.1% m/m). Shipments in all manufacturing industries increased 1.2% m/m (10.9% y/y) in January after an upwardly revised 0.8% m/m rise in December (initially +0.3% m/m).

Also in the report are key readings on capital goods shipments and orders. The capital goods shipments figures provide a dependable reading on the course of business spending on equipment in the national accounts. Core (that is, excluding defense and aircraft) capital goods shipments increased a solid 1.9% m/m (10.9% y/y) in January on top of an upwardly revised 1.6% m/m gain in December (initially +1.3% m/m). This signals a strong beginning for business equipment spending in Q1 2022. Core capital goods orders increased 0.9% m/m (10.2% y/y) in January following an upwardly revised 0.4% m/m gain in December (initially +0.3% m/m).

Unfilled orders for durable goods rose 0.9% m/m (8.7% y/y) after an upwardly revised 0.8% m/m increase in December (initially +0.5% m/m). Unfilled orders are not calculated for nondurable goods. Manufacturing inventories increased 0.7% m/m (9.7% y/y) following an upwardly revised 0.4% m/m rise in December (initially +0.2% m/m), reflecting a 0.4% m/m rise in durable goods inventories and a 1.1% m/m jump in nondurable goods inventories.

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