Durable Goods Orders Surge In December - January 28, 2013
Orders for durable goods, one of the more volatile series that the investment community has to examine each month, was issued for December within the past hour, or so. And, results easily beat expectations and, in the process, turned in one of the better showings in some time.
Specifically, this series, which examines demand for such long lived consumer and industrial goods as jet aircraft, washing machines, cars, computers, and television sets, rose by 4.6% last month, more than twice the estimated 2.0% gain, and light years better than the tepid and downwardly revised November rise of 0.7%. Initially, the November tally had been estimated at 0.8%. Encouragingly, this was the seventh increase in the past eight months for this series. The latest uptick, we believe augurs well for economic growth in the first quarter of the new year. It should be noted that the U.S. Commerce Department, which issued the durable goods report at 8:30AM (EST) this morning, will be releasing GDP data for the fourth quarter of 2012 this Wednesday morning, Expectations are that the nation's business expansion slowed notably during the period, easing back to about a 1.0% improvement in the latest period, from 3.1% in the third quarter.
As for the durable goods figures, the latest month saw a notable jump in orders for transportation equipment, including high-priced airliners. Taking out the transportation component, we find that such orders rose just 1.3% in total. Excluding defense offerings, durable goods orders rose just 1.2%.
Meanwhile, in one of the more pivotal industrial categories, nondefense orders for capital goods jumped by a strong 3.8% last month. Defense orders for capital goods, meantime, more than doubled from November, although this is a much smaller series than nondefense orders for capital goods.
Looking at other categories, we find that there were nice monthly gains in demand within such sectors as primary metals, fabricated metal products, machinery, computers, communications equipment, transportation equipment, and capital goods.
As noted, this is a notoriously volatile series, as can be seen in the 110.4% surge in orders for defense capital goods in December, versus the minuscule 3.3% gain in this area during November. Another notable month-to-month swing took place in transportation equipment, which eased by 0.5% in November, but jumped by 11.9% last month. Furthermore, capital goods orders, a loser by 1.8% in November, soared by 14.4% in December. Finally, defense aircraft and parts, which dropped by 10.7% in November, leaped forward by 56.4% last month.
Notwithstanding the unevenness cited above, the latest report from the Commerce Department was a good one, overall, as the aggregate picture was comparatively bright, and is consistent with the general brightening in the economic backdrop that we now see evolving in the first part of the new year.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.