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Durable Goods Orders: Rebound But Anemic Core Trend

February 27, 2017
Bottom Line: Durable goods orders rose in January. Although they have still fallen at a 14.5% annualized rate in the last three months, this reflects sharp swings in defense and aircraft orders.. Looking at the past 12 months, hardgood orders have declined at a 0.6% annualized rate. While the trend remains anemic at both the core and headline level for durable goods orders, the January level of non-defense capital goods shipments ex-aircraft, proxies for equipment and software investment, is modestly above its Q4 level, suggesting that capital spending early in Q1 had a positive impact on GDP growth.

Durable Goods Orders ROSE by 1.8% in January, compared with market expectations for an increase of 1.6%. Moreover, the prior month was revised lower from -0.4%to -0.8%.

Transportation Orders ROSE by 6.0% with civilian aircraft orders climbing by 69.9% while motor vehicle orders climbed by 0.2%. Ex-transportation orders FELL by 0.2%.

Core Durable Goods Orders, those excluding both civilian aircraft and defense, FELL by 0.1% and are 2.1% ABOVE their year ago level.

Nondefense Capital Goods Shipments FELL. Including civilian aircraft, they FELL by 0.4% and excluding them they FELL by 0.6%

Durable manufacturing inventories were UNCHANGED..

The January level of nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, is modestly above its Q4 level, suggesting that capital spending will have a positive Q1 impact on GDP growth.