New orders for manufactured durable goods in January, down two of the last three months, decreased $13.0 billion or 4.5% to $272.3 billion, the U.S. Census Bureau announced on Feb. 27. This followed a 5.1% December increase.
This drop "merely unwinds the spike in December that was driven by a surge in aircraft orders," notes Oren Klachkin, Lead US Economist, for Oxford Economics. Excluding transportation, new orders increased 0.7%. Excluding defense, new orders decreased 5.1%.
Transportation equipment, also down two of the last three months, drove the decrease, $14.2 billion or 13.3% to $92.8 billion.
However, if transportation is excluded new orders increased 0.7%. And excluding defense, new orders decreased 5.1%.
"The durable goods orders and shipments data suggest that business equipment investment rose in January, adding to a recent string of data points that the economy continued to grow in early Q1, notes Klachkin. "Comparing the January to November data shows that headline orders held steady"
Klachkin said his organization expects durable goods activity to "gradually soften in the coming months as consumers cut back on goods spending and businesses restrain investment as high borrowing costs bite and economic jitters stay high. While it may take time for the downturn to arrive, we maintain our conviction that a recession is on the way.
"The core data offered a relatively upbeat picture of business investment. Core orders - nondefense capital goods orders excluding aircraft - increased 0.8% last month. What's more, core shipments - our preferred business equipment spending gauge - climbed 1.1% and points to growth in early Q1. As we regularly caution, high inflation means these nominal data overstate the real health of durable goods activity. However, business investment appears to have started 2023 on a positive note."
