Economy

Durable Goods Prove Quite Durable for January

Jon C. Ogg

Published: February 25, 2016 11:35 am

Last Updated: January 13, 2020 12:43 pm

Thursday’s economic reports were dominated by an unusually strong report on durable goods in January. The Commerce Department indicated that the headline durable goods reading, the big-ticket items that last for years, rose by a sharp 4.9% ($11.1 billion) to $237.5 billion in January. Bloomberg had previously shown that its Econoday consensus estimate was for just a 2.0% gain in the new orders.

The report was expected to be dominated by the new orders for transportation. This still rose by 1.8% in January rather than the 0.0% expected. Excluding defense orders, the number for durable goods was up by 4.5%.

As a reminder, durable goods on a monthly basis is a very volatile data set. That being said, durable goods had been weak for two prior reports.

What stood out here was that even the core capital goods orders rose by 3.9%. On a year-over-year basis, the reading was far less impressive at -2.8%. The monthly strength was dominated by big orders from machinery, computers and fabricated metals.

The big question is whether January is the start of a trend or if it was just a one-off fluke. Other key individual data sets were listed as follows:

• Shipments of manufactured durable goods in January, up two of the last three months, increased $4.6 billion, or 1.9 percent, to $241.9 billion. This followed a 1.6 percent December decrease.
• Transportation equipment, also up two of the last three months, led the increase, $4.3 billion or 5.7 percent to $80.0 billion.
• Unfilled orders for manufactured durable goods in January, up three of the last four months, increased $0.6 billion or 0.1 percent to $1,187.7 billion.
• Computers and electronic products, up twenty-five consecutive months, drove the increase, $0.7 billion or 0.5 percent to $137.2 billion.
• Inventories of manufactured durable goods in January, down six of the last seven months, decreased $0.4 billion, or 0.1 percent, to $396.3 billion. This followed a 0.2 percent December increase.
• Primary metals, down twelve consecutive months drove the decrease, $0.7 billion or 2.0 percent to $33.8 billion.
• Nondefense new orders for capital goods in January increased $14.0 billion or 21.6 percent to $79.2 billion. Shipments increased $2.9 billion or 3.9 percent to $78.3 billion. Unfilled orders increased $0.9 billion or 0.1 percent to $743.9 billion. Inventories decreased $0.1 billion or 0.1 percent to $175.4 billion.
• Defense new orders for capital goods in January increased $1.1 billion or 11.9 percent to $10.2 billion. Shipments decreased $0.5 billion or 4.8 percent to $9.6 billion. Unfilled orders increased $0.7 billion or 0.4 percent to $151.1 billion. Inventories increased $1.0 billion or 4.6 percent to $22.3 billion.