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Economy in Brief

U.S. Durable Goods Orders' December Gain Disappoints
by Tom Moeller  January 27, 2021

• Orders increase is reduced by orders for commercial aircraft decline.

• Bookings less transportation orders remain firm.

• Shipments surge while inventories & order backlogs ease.

Factory sector activity remains on a firm footing. Manufacturers' orders for durable goods increased 0.2% during December (1.4% y/y) after strengthening 1.2% in November, revised from 0.9%. October's 1.8% rise was unrevised. A 1.0% m/m gain had been expected by the Action Economics Forecast Survey. The rise was the eighth consecutive monthly increase. New orders have risen 46.5% since the low in April.

Orders for nondefense capital goods excluding aircraft continued to firm last month, up 0.6% (8.4% y/y) following a 1.0% November gain. It was the weakest of eight consecutive monthly increases.

Orders for transportation equipment declined 1.0% (-7.9% y/y) in December after strengthening 1.9% in November. The decline was due to a sharp fall in commercial aircraft orders. Orders for motor vehicles and parts orders rose 1.4% (7.7% y/y). Offsetting the transportation decline was a 2.4% rise (5.7% y/y) in machinery orders which followed a 1.4% gain. Communications equipment orders improved 0.3% (23. 1% y/y) but computer & related product orders fell 3.4% (+6.9% y/y). Orders for primary metals rose 0.6% (1.8% y/y) and fabricated metals orders improved 0.6%. Electrical equipment orders edged 0.1% higher (1.2% y/y).

Total shipments surged 1.4% (3.4% y/y) in December after a 0.4% rise. Shipments of core capital goods rose 0.5% (6.6% y/y), the same as in November. Shipments of transportation products surged 2.7% (1.5% y/y) after improving 0.6%. Shipments excluding transportation rose 0.8% (4.3% y/y) after a 0.3% rise. Machinery shipments improved 0.8% (0.4% y/y) while electrical equipment shipments improved 0.7% (-1.7% y/y).

Unfilled orders for durable goods eased 0.3% (-6.5% y/y) and have been falling since September 2018. Excluding transportation, order backlogs rose 1.0% (3.7% y/y), the same as in November.

Inventories of durable goods edged 0.2 % lower (+0.6% y/y) following three straight monthly increases. Excluding transportation, inventories increased 0.8% (-1.5% y/y), the largest of four consecutive monthly gains.

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 Dec Y/Y % 2020 2019 2018
New Orders (SA, % chg) 0.2 1.2 1.8 1.4 -7.2 -1.5 7.1
    Transportation -1.0 1.9 1.5 -7.9 -20.1 -4.8 9.2
  Total Excluding Transportation 0.7 0.8 2.0 6.5 -0.4 0.4 5.9
    Nondefense Capital Goods Excl. Aircraft 0.6 1.0 1.7 8.4 1.5 1.7 4.6
Shipments 1.4 0.4 1.5 3.4 -5.2 0.8 6.6
    Nondefense Capital Goods Excl. Aircraft 0.5 0.5 2.6 6.6 0.2 2.4 5.7
Unfilled Orders -0.3 -0.0 -0.2 -6.5 -6.5 -1.8 3.9
Inventories -0.2 0.9 0.3 0.6 0.6 4.1 5.2
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