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Economy in Brief

U.S. Durable Goods Orders Are Depressed by Fewer Aircraft Bookings
by Tom Moeller  January 27, 2015

New orders for durable goods declined 3.4% during December (+0.3% y/y) following a 2.1% November drop, revised from -0.7% reported initially. The latest decline was the fourth in the last five months. A 55.5% collapse (-64.5% y/y) in commercial aircraft bookings provided the impetus for the outsized shortfall. New orders beyond the transportation sector slipped 0.8% (+3.8% y/y), the third consecutive monthly decline. Orders were expected to rise 0.4% in the Action Economics Forecast Survey. During the last ten years, there has been an 88% correlation between the y/y change in orders and the change in real GDP.

Despite the latest decline, for all of last year durable goods orders firmed 6.1%, the largest gain in three years. Improvement was broad-based. Outside of the transportation sector, orders improved 5.0% for the year, about the same as they did in 2013.

The decline in aircraft orders during December was accompanied by a 2.7% rise (10.0% y/y) in motor vehicles & parts orders. Bookings were mixed outside of the transportation sector. To the downside, machinery orders fell a sharp 3.7% (-6.2% y/y), the fourth consecutive monthly decline. Primary metals bookings fell 1.5% (+2.6% y/y), down for the third straight month. Computers & related products orders declined 10.4% (-23.5% y/y), continuing their sharp downtrend. Communications equipment orders fell 1.6% (-6.7% y/y) after a 9.8% rise. To the upside were fabricated metals orders. The 1.0% rise (12.0% y/y) was accompanied by a 1.2% gain (2.6% y/y) in orders for electrical equipment and appliances.

Orders for nondefense capital goods were pulled 9.7% lower (-12.2% y/y) by the drop in aircraft. Orders outside of the aircraft sector fell 0.6% (+1.7% y/y), the fifth decline in the last six months.

Shipments of durable goods gained 1.1% (5.8% y/y) last month but edged just 0.2% higher (4.1% y/y) excluding the transportation sector. Unfilled orders for durables declined 0.8% (+10.1% y/y) while excluding transportation they fell 0.3% (+6.3% y/y). Inventories of durable goods gained 0.5% (5.8% y/y) and outside of transportation they also rose 0.5% (4.0% y/y).

The durable goods figures are available in Haver's USECON database. The Action Economics consensus forecast figure is in the AS1REPNA database.

Durable Goods NAICS Classification Dec Nov Oct Y/Y 2014 2013 2012
New Orders (SA, %) -3.4 -2.1 0.3 0.3 6.1 5.2 4.1
  Transportation -9.2 -3.9 3.5 -7.2 8.5 7.9 8.9
Total Excluding Transportation -0.8 -1.3 -1.2 3.8 5.0 4.0 2.1
  Nondefense Capital Goods -9.7 -1.6 -0.0 -12.2 6.2 8.7 3.7
    Excluding Aircraft -0.6 -0.6 -1.8 1.7 4.4 5.0 2.1
Shipments 1.1 -0.7 -0.1 5.8 4.9 3.7 6.4
Inventories 0.5 0.4 0.5 5.8 5.8 3.8 4.5
Unfilled Orders -0.8 0.2 0.5 10.1 10.1 7.0 3.6
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