Today’s durable goods numbers from the Census Bureau were disappointing. New orders for durable goods fell 4 percent in January, with declines in a number of major sectors. Keeping it all in perspective, though, new orders rose 4.2 percent and 3.2 percent in November and December, and the $206.1 billion in new orders in January still outpaces the levels from October. New orders remain 8.8 percent higher than in January 2011.
A number of major sectors experienced declines in January for new orders. These were led by the transportation sector (down 6.1 percent), with decreases in both defense and nondefense aerospace orders for the month. (Nondefense aerospace figures are highly volatile due to the timing of when orders come in for new planes, and there was a large spike in sales in December.) Excluding transportation, new orders fell by 3.2 percent.
Other sectors with losses include machinery, primary metals, electrical equipment and computers. Nondefense capital goods fell 6.3 percent, reversing the 9.3 percent and 6.8 percent gains in the prior two months.
Meanwhile, shipments of durable goods rose 0.4 percent, below the 1.9 percent increase of December. Among shipments, the transportation sector did the strongest, up 5.4 percent, with strong gains in the aerospace sectors and for motor vehicles. Excluding transportation, shipments fell by 1.1 percent. Declines in machinery, computers and capital goods helped to drive this number lower in January.
Unfilled orders and inventories grew 0.5 percent and 0.7 percent, respectively, in January, continuing a long streak for both of them.
While other reports that show improvements in the economy, these findings offer a countervailing viewpoint. January new durable goods orders were much weaker than analysts had expected and differ greatly with surveys showing rising levels of production. As noted earlier, the overall trend remains a positive one, but this bump in the road was both unexpected and potentially worrisome if it is the beginning of a new trend. The optimist in me, though, suggests that January’s declines were simply a leveling off of the large gains experienced in November and December.
Chad Moutray is chief economist, National Association of Manufacturers.
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