Durable Goods Report Finally Arrives: Mixed Strength in All

A gain of 1.2% in durable goods in December might sound better than some had expected, considering how much slowness had been seen in many economic reports around that time. Unfortunately, Dow Jones (WSJ) was calling for a headline gain of 1.5% for the month. Also, the data collection and processing had been delayed for this indicator release due to a lapse of federal funding from December 22, 2018, through January 25, 2019, during the partial federal government shutdown.

Orders for big-ticket manufactured goods in the United States were actually the strongest in four months on the headline report. While this is a positive headline, the actual breakdown of the durable goods report was mixed. A good portion of that strength was tied to orders for commercial aircraft, showing a 28.4% gain. And to prove the point further, business investment spending fell for the second consecutive month.

The U.S. Department of Commerce’s 1.2% gain was up from a revised 1.0% gain in November. The big-ticket items all-in rose by $3.0 billion to $254.4 billion. Orders for nondefense capital goods, excluding aircraft, was actually down 0.7% in December, versus a 1% drop in November. Excluding transportation, new orders increased by just 0.1% in December. And the ex-defense new orders were up 1.8%.

Transportation equipment had risen in four of the past five months, and this led the increase with a $2.8 billion gain (3.3%) to $90.2 billion.

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Additional data were shown as follows:

• Unfilled orders for manufactured durable goods in December, down three consecutive months, fell by $1.1 billion (−0.1%) to $1.180.1 trillion.
• Inventories of manufactured durable goods in December have been up 23 of the past 24 months, and this rose by $0.9 billion (0.2%) to $414.7 billion.
• Nondefense new orders for capital goods in December increased by $2.8 billion (3.7%) to $77.8 billion.

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