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Economy in Brief

U.S. Durable Goods Orders Surprise to Upside in January
by Sandy Batten  February 25, 2022

• January increase led by strong nondefense aircraft orders.

• December decline revised up from decrease to a meaningful increase.

• Core capital goods shipments up 1.9% m/m, pointing to a solid beginning for Q1 equipment spending.

Manufacturers' new orders for durable goods rose a much larger-than-expected 1.6% m/m (+16.5% y/y) in January. The Action Economics Forecast Survey was expecting a 0.6% m/m increase. The initially reported 0.9% m/m fall in December was revised up markedly to a 1.2% m/m increase. The revision to December was due mostly to a large upward revision to transportation orders with the initially reported 3.9% m/m decline revised to a 1.7% m/m increase. Excluding transportation, orders were up a more modest, but still solid, 0.7% m/m in January following an upwardly revised 0.9% m/m gain in December (initially reported as +0.4% m/m).

A 3.4% m/m (+29.4% y/y) increase in transportation orders (largely nondefense aircraft orders) led the January increase in total orders. This was the third consecutive monthly increase in transportation orders, which have risen 13.8% over this period. Orders for motor vehicles and parts slipped 0.4% m/m in January, their first monthly decline in the past four months, while orders for defense aircraft plunged 41.1% m/m on top of a 21.9% m/m decline in December. By contrast, orders for nondefense aircraft jumped up 15.6% in January, their third consecutive double-digit monthly increase. Apart from transportation orders, orders in other sectors were little changed except for a 2.3% m/m increase in machinery orders.

Durable goods shipments rose 1.2% m/m (+9.6% y/y) in January following an upwardly revised 1.3% m/m gain in December (initially reported as 0.8% m/m). In contrast to orders, transportation shipments did not play a leading role in the overall January gain. They were up only 0.3% m/m in January after a 1.6% m/m rise in December. Excluding these, other shipments rose 1.5% m/m in January on top of a 1.2% m/m increase in December. Meaningful increases were spread across major sectors. Fabricated metal products shipments rose 1.6% m/m; machinery shipments jumped up 2.7% m/m; and shipments of computers and electronic products rose 1.3% m/m as did shipments of electrical equipment and appliances.

This report now contains an advance reading on shipments of nondurable goods. They increased 1.3% m/m (13.1% y/y) following an upwardly revised 0.2% m/m increase in December (initially -0.1% m/m). Shipments in all manufacturing industries increased 1.2% m/m (10.9% y/y) in January after an upwardly revised 0.8% m/m rise in December (initially +0.3% m/m).

Also in the report are key readings on capital goods shipments and orders. The capital goods shipments figures provide a dependable reading on the course of business spending on equipment in the national accounts. Core (that is, excluding defense and aircraft) capital goods shipments increased a solid 1.9% m/m (10.9% y/y) in January on top of an upwardly revised 1.6% m/m gain in December (initially +1.3% m/m). This signals a strong beginning for business equipment spending in Q1 2022. Core capital goods orders increased 0.9% m/m (10.2% y/y) in January following an upwardly revised 0.4% m/m gain in December (initially +0.3% m/m).

Unfilled orders for durable goods rose 0.9% m/m (8.7% y/y) after an upwardly revised 0.8% m/m increase in December (initially +0.5% m/m). Unfilled orders are not calculated for nondurable goods. Manufacturing inventories increased 0.7% m/m (9.7% y/y) following an upwardly revised 0.4% m/m rise in December (initially +0.2% m/m), reflecting a 0.4% m/m rise in durable goods inventories and a 1.1% m/m jump in nondurable goods inventories.

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

Durable Goods NAICS Classification Jan Dec Nov Jan Y/Y % 2021 2020 2019
New Orders (SA, % chg) 1.6 1.2 3.2 16.5 20.9 -13.6 3.5
    Transportation 3.4 1.7 8.2 29.4 33.9 -35.8 13.3
  Total Excluding Transportation 0.7 0.9 1.1 11.2 16.1 -1.0 -1.4
    Nondefense Capital Goods Excl. Aircraft 0.9 0.4 0.2 10.2 15.0 1.1 -0.1
Shipments 1.2 1.3 0.8 9.6 12.6 -6.0 -1.5
    Nondefense Capital Goods Excl. Aircraft 1.9 1.6 0.4 10.9 12.8 -0.2 0.6
Unfilled Orders 0.9 0.8 0.8 8.7 7.4 -8.4 10.4
Inventories 0.4 0.8 0.8 10.3 9.6 0.4 5.8
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