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Durable Goods: Solid Gain in Q4 Leaves Scope for Upward GDP Revisions

January 26, 2018
Bottom Line: Bottom Line: Durable goods orders rose in December, climbing at a 18.0% annualized rate in the last three months. That said, this reflects sharp swings in aircraft orders, evidenced by 265 orders at Boeing in December versus 159 in November. Looking at the past 12 months, hardgood orders have increased at a 11.5% annualized rate.

  • Nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, are sharply above their Q3 level, suggesting that capital spending's contribution to Q4 GDP growth will likely be revised higher.

Durable Goods Orders ROSE by 2.9% in December, compared with market expectations for an increase of 0.8%. Moreover, the prior month was revised higher from 1.3%to 1.7%.

Transportation Orders ROSE by 7.4% with civilian aircraft orders climbing by 15.9% while motor vehicle orders climbed by 0.4%. Ex-transportation orders ROSE by 0.6%.

Core Durable Goods Orders, those excluding both civilian aircraft and defense, ROSE by 1.44% and are 8.1% ABOVE their year ago level.

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

Durable manufacturing inventories ROSE by 0.3%.

Nondefense capital goods shipments ex-aircraft, proxies for equipment and software investment, are sharply above their Q3 level, suggesting that capital spending will likely make a positive contribution to Q4 GDP growth.