Strong Aircraft Sales Lifted New Durable Goods Orders by 2.9 Percent in December

The Census Bureau said that new durable goods orders rose 2.9 percent in December, extending the 1.7 percent gain seen in November. The increase in both months stemmed largely from strong defense and nondefense aircraft and parts sales, jumping 55.3 percent and 15.9 percent in December, respectively. It is important to note that aircraft orders can be highly volatile from month to month. Excluding transportation equipment, new durable goods orders were up 0.6 percent in December, increasing for the sixth straight month.

New durable goods orders have generally trended in the right direction over the course of the past 12 months. In fact, new durable goods orders have soared 11.5 percent since December 2016. With transportation equipment excluded, the year-over-year rate was a rather robust 8.2 percent. One of the more important measures in this release is new orders for core capital goods (or nondefense capital goods excluding aircraft), which can often be seen as a proxy for capital spending in the U.S. economy. In November, new orders for core capital goods edged down 0.3 percent, but like the headline number above, the year-over-year pace was a very healthy 8.4 percent.

Looking more closely at the various durable goods sectors in December, the data were mixed but mostly higher. There were increased sales for primary metals (up 1.4 percent), fabricated metal products (down 0.9 percent), other durable goods (up 0.9 percent), machinery (up 0.6 percent) and motor vehicles and parts (up 0.4 percent). In contrast, orders were lower for electrical equipment and appliances (down 0.9 percent) and computers and electronic products (down 0.2 percent).

Meanwhile, durable goods shipments increased 0.6 percent in December, but with transportation equipment excluded, shipments rose by 1.1 percent. Much like the new orders data described above, shipments have trended strongly higher over the past year. Since December 2016, durable goods shipments have risen at solid rates, up 5.8 percent, with year-over-year growth of 7.1 percent when transportation equipment shipments were excluded. In addition, shipments of core capital goods have also improved mightily over the past 12 months, up 8.4 percent year-over-year.

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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