New Durable Goods Orders Fell in January, Led by Decline in Highly Volatile Aircraft Sales

The Census Bureau said that new durable goods orders fell 3.7 percent in January following two months of solid gains in both November and December. The decline in the latest data stemmed largely from significant decreases in defense and nondefense aircraft and parts sales, which were off by 45.6 percent and 28.4 percent, respectively. It is important to note that aircraft orders can be highly volatile from month to month. Excluding transportation equipment, new durable goods orders edged down 0.1 percent in January, falling (ever-so-slightly) for the first time since June. As such, broader activity in the durable goods sector started 2018 on a soft note.

Nonetheless, 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 6.8 percent since December 2016. With transportation equipment excluded, the year-over-year rate was 6.9 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 January, new orders for core capital goods were off by 0.2 percent, but like the headline number above, the year-over-year pace was a very healthy 6.3 percent.

Looking more closely at the various durable goods sectors in January, the data were mixed. There were increased sales for computers and electronic products (up 0.6 percent), fabricated metal products (up 0.5 percent) and motor vehicles and parts (up 0.1 percent). In contrast, orders were lower for other durable goods (down 1.1 percent), primary metals (down 0.9 percent), electrical equipment and appliances (down 0.8 percent) and machinery (down 0.4 percent).

Meanwhile, durable goods shipments increased 0.2 percent in January, or with transportation equipment excluded, shipments inched up by 0.1 percent. Much like the new orders data described above, shipments have trended strongly higher over the past year. Since January 2017, durable goods shipments have risen at solid rates, up 6.0 percent, with year-over-year growth of 6.9 percent when transportation equipment shipments were excluded. In addition, shipments of core capital goods have also improved mightily over the past 12 months, up 8.8 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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