New Durable Goods Orders Rebounded in January from Softness in December

The Census Bureau said that new durable goods orders rose 4.9 percent in January, rebounding from the 4.6 percent decline seen in December. Indeed, the $237.5 billion figure for new orders in January was not much different than the $237.4 billion observed in November, making December’s reading a bit of an outlier. Still, over the longer term, manufacturing activity remains quite soft. New orders for durable goods products have increased 1.8 percent over the past 12 months. Yet, much of that has come from transportation equipment orders. Excluding transportation, year-over-year growth for new orders would have been down 0.6 percent since January 2015. This suggests broader weaknesses outside of the transportation sector.

Motor vehicles and parts orders were up 3.0 percent in January, with year-over-year growth of 10.7 percent. As such, it continues to be one of the brighter spots among durable goods sectors. Defense and nondefense aircraft orders were also up sharply in January, recovering from sizable declines in December. Among other sectors, the largest monthly gains in new orders were seen in the machinery (up 6.9 percent), fabricated metal products (up 1.6 percent), computers and electronic products (up 0.8 percent) and primary metals (up 0.7 percent). New orders for core capital goods (or nondefense capital goods excluding aircraft) were up 3.9 percent. At the same time, demand for core capital goods has been quite weak over the past year, with new orders down 2.8 percent since January 2015.

Meanwhile, durable goods shipments also recovered from a soft December, up 1.9 percent in January after a decline of 1.6 percent in the prior report. Nondefense aircraft orders were a large part of this rebound (and also a significant contributor to December’s decline), with shipments of motor vehicles also seeing healthy gains, up 3.1 percent. Excluding transportation, shipments eked out a gain of just 0.2 percent, suggesting a more mixed picture. Sectors with positive growth in shipments in January included fabricated metal products (up 1.5 percent), electronic equipment and appliances (up 0.4 percent) and primary metals (up 0.2 percent). In contrast, shipments were lower for computers and electronic products (down 0.5 percent) and other durable goods (down 0.7 percent).

On a year-over-year basis, durable goods shipments increased by 0.9 percent. However, much like the new orders data discussed above, shipments declined by 0.9 percent when transportation equipment were excluded.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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