Economy in Brief: January 2022

Manufacturers' new orders for durable goods fell 0.9% m/m (+15.6% y/y) in December after an upwardly revised 3.2% m/m increase (initially 2.5%) in November. The Action Economics Forecast Survey was expecting a 0.5% m/m decline. For all of 2021, orders were up 20.9% after having fallen 13.6% in 2020.

The December decline was due mostly to a 3.9% m/m fall (+23.6% y/y) in transportation orders following an 8.2% m/m jump in November. A 13.5% m/m drop in aircraft orders was the major source of the decline in transportation orders in December. Aircraft orders had jumped up 30.6% m/m in November. Orders for motor vehicles and parts were up 1.4% m/m, their third consecutive monthly increase. Excluding transportation, the remainder of orders rose 0.4% m/m (+12.0% y/y) in December on top of a 1.1% increase in November. Across the other major sectors, orders for primary metals and fabricated metal products rose in December while orders for machinery, computers and electronic products and for electrical equipment fell.

Durable goods shipments rose 0.8% m/m (10.1% y/y) in December, their fourth consecutive monthly increase, after an upwardly revised 0.8% m/m rise in November (initially reported as 0.7% m/m). Transportation shipments were up 0.9% m/m in December while shipments of defense goods slumped 2.5% m/m. Shipments excluding transportation rose 0.8% m/m while shipments excluding defense were up 1.0% m/m in December. This report now contains an advance reading on shipments of nondurable goods. They slipped 0.1% m/m (+13.8% y/y) in December, their first monthly decline in 10 months, following a 0.5% m/m rise in November. Shipments in all manufacturing industries increased 0.3% m/m (+11.2% y/y) in December after an upwardly revised 0.7% m/m gain in November (initially 0.6% m/m).

Also in the report are key readings on capital goods shipments and orders. The 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 1.3% m/m (10.4% y/y) in December following an upwardly revised 0.4% monthly gain in November (initially 0.3% m/m). This provides a good starting point for business equipment spending for Q1 2022. Core capital goods orders were unchanged in December (+10.4% y/y) following a 0.3% monthly gain in December (revised up from 0.1% m/m).

Unfilled orders for durable goods rose 0.5% m/m (+7.4% y/y) in December after a 0.8% m/m gain in November. Unfilled orders are not calculated for nondurable goods. Manufacturing inventories increased 0.2% m/m (8.9% y/y) in December, reflecting a 0.7% m/m rise in durable goods inventories and a 0.5% m/m decline 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.