Economy
Durable Goods Orders Rebound 2.4 Percent on Military Spending
Written by Sandy Williams
January 27, 2020
Durable goods orders rose 2.4 percent in December supported by a surge in defense spending. Defense capital goods increased 90.2 percent last month primarily due to orders for defense aircraft, the Census Bureau reported.
The uptick in December orders follows a sharp decline in November of 3.1 percent, revised downward from 2.1 percent.
Excluding the volatile transportation category (up 7.6 percent in December), orders were down 0.1 percent. Core capital goods–non-defense minus aircraft and a proxy for business investment–fell 0.9 percent for the largest decrease in eight months.
Commercial aircraft demand plummeted 74.7 percent as Boeing continues to struggle with its troubled 737 Max plane. Military plane orders increased by 168.3 percent following a boost in military spending included in funding bills passed in December.
The December 2019 advance report on durable goods, manufacturers’ shipments, inventories and orders follows:
New Orders
New orders for manufactured durable goods in December increased $5.7 billion or 2.4 percent to $245.5 billion. This increase, up two of the last three months, followed a 3.1 percent November decrease. Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders decreased 2.5 percent. Transportation equipment, up following three consecutive monthly decreases, drove the increase by $5.9 billion or 7.6 percent to $82.9 billion.
Shipments
Shipments of manufactured durable goods in December, down six consecutive months, decreased $0.5 billion or 0.2 percent to $250.4 billion. This followed a 0.1 percent November decrease. Transportation equipment, also down six consecutive months, led the decrease by $0.4 billion or 0.4 percent to $83.2 billion.
Unfilled Orders
Unfilled orders for manufactured durable goods in December, down three of the last four months, decreased $0.8 billion or 0.1 percent to $1,156.0 billion. This followed a 0.6 percent November decrease. Machinery, down 14 consecutive months, led the decrease by $0.5 billion or 0.5 percent to $101.6 billion.
Inventories
Inventories of manufactured durable goods in December, up 17 of the last 18 months, increased $2.2 billion or 0.5 percent to $436.0 billion. This followed a 0.4 percent November increase. Transportation equipment, also up 17 of the last 18 months, led the increase by $1.7 billion or 1.2 percent to $151.2 billion.
Capital Goods
Nondefense new orders for capital goods in December decreased $4.5 billion or 6.5 percent to $64.5 billion. Shipments increased $0.4 billion or 0.5 percent to $74.8 billion. Unfilled orders decreased $10.3 billion or 1.5 percent to $671.6 billion. Inventories increased $2.2 billion or 1.1 percent to $199.2 billion. Defense new orders for capital goods in December increased $9.1 billion or 90.2 percent to $19.2 billion. Shipments decreased $0.3 billion or 2.5 percent to $12.4 billion. Unfilled orders increased $6.8 billion or 4.3 percent to $165.0 billion. Inventories decreased $0.3 billion or 1.3 percent to $24.0 billion.
Revised November
Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $490.6 billion (revised from $493.0 billion); shipments, $501.7 billion (revised from $502.2 billion); unfilled orders, $1,156.7 billion (revised from $1,158.7 billion) and total inventories, $701.1 billion (revised from $701.0 billion).
Sandy Williams
Read more from Sandy WilliamsLatest in Economy
US construction spending drops again in August
Construction spending in the US declined for a third month in August but showed an increase year over year (y/y). The US Census Bureau estimated construction spending to be $2.131 trillion in August on a seasonally adjusted annual rate (SAAR). While this was 0.1% below July’s revised spending rate, it was 4.1% higher than spending […]
ISM: Manufacturing contracts again in September
US manufacturing activity contracted for the sixth consecutive month in September, according to the latest report from the Institute for Supply Management (ISM). The index has indicated a contracting industrial sector for 22 of the past 23 months.
Chicago Business Barometer remains gloomy in September
The Chicago Business Barometer increased marginally in September but continues to indicate deteriorating business conditions.
Consumer confidence sours in September
The Conference Board reported that consumer confidence in the US dropped to one of the lowest readings of the year in September. With concerns mounting about business conditions and the labor market, the tumble was the biggest monthly decline since August 2021.
September energy market update
In this Premium analysis we cover oil and natural gas prices, drilling rig activity, and crude oil stock levels in North America. Energy prices and rig counts are advance indicators of demand for oil country tubular goods (OCTG), line pipe, and other steel products.