Economy

Durable Goods Orders Grow Modestly in December

January 27, 2021

Orders for durable goods rose for an eighth month in December, gaining 0.2 percent after an upward revision to 1.2 percent in November. Growth was below economists’ projections of 0.8 percent and the smallest increase since August. The pullback in momentum was primarily due to a sharp drop in aircraft orders.

Excluding the volatile category of transportation, orders climbed 0.7 percent. Primary and fabricated metals inched higher in December and machinery orders jumped 2.4 percent.

Core capital goods orders, nondefense goods minus aircraft and a proxy for future investment, rose 0.6 percent last month.

“We continue to witness the strength in manufacturing versus the weakness in services,” said Jennifer Lee, senior economist at BMO Capital Markets. “This report shows firm upward momentum for business investment as the longest year ever came to an end.”

The Census Bureau’s December 2020 advance report on durable goods manufacturers’ shipments, inventories and orders follows:

New Orders

New orders for manufactured durable goods in December increased $0.4 billion or 0.2 percent to $245.3 billion. This increase, up eight consecutive months, followed a 1.2 percent November increase. Excluding transportation, new orders increased 0.7 percent. Excluding defense, new orders increased 0.5 percent. Machinery, also up eight consecutive months, drove the increase by $0.8 billion or 2.4 percent to $33.2 billion.

Shipments

Shipments of manufactured durable goods in December, up seven of the last eight months, increased $3.5 billion or 1.4 percent to $253.8 billion. This followed a 0.4 percent November increase. Transportation equipment, also up seven of the last eight months, led the increase by $2.2 billion or 2.7 percent to $84.8 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in December, down nine of the last 10 months, decreased $3.2 billion or 0.3 percent to $1,070.4 billion. This followed a virtually unchanged November decrease. Transportation equipment, down 10 consecutive months, drove the decrease by $6.8 billion or 0.9 percent to $706.3 billion.

Inventories

Inventories of manufactured durable goods in December, down following three consecutive monthly increases, decreased $0.7 billion or 0.2 percent to $425.9 billion. This followed a 0.9 percent November increase. Transportation equipment, down following four consecutive monthly increases, drove the decrease by $2.8 billion or 1.8 percent to $148.0 billion.

Capital Goods

Nondefense new orders for capital goods in December decreased $1.4 billion or 2.0 percent to $70.3 billion. Shipments increased $2.4 billion or 3.3 percent to $74.2 billion. Unfilled orders decreased $4.0 billion or 0.7 percent to $587.7 billion. Inventories decreased $1.7 billion or 0.9 percent to $194.4 billion. Defense new orders for capital goods in December decreased $0.7 billion or 5.3 percent to $11.8 billion. Shipments decreased $0.7 billion or 5.1 percent to $12.7 billion. Unfilled orders decreased $1.0 billion or 0.5 percent to $177.6 billion. Inventories increased less than $0.1 billion or 0.2 percent to $21.1 billion.

Revised November Data

Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $487.8 billion (revised from $487.2 billion); shipments, $493.1 billion (revised from $492.9 billion); unfilled orders, $1,073.6 billion (revised from $1,073.2 billion); and total inventories, $693.6 billion (revised from $692.9 billion).