Economy

Durable Goods Report Disappoints in December

February 21, 2019

A delayed report on manufactured durable goods showed new orders increased 1.2 percent in December, due mostly to orders for transportation. Excluding transportation, new orders rose just 0.1 percent.

Orders for core capital goods, which exclude defense and aircraft and are considered a measure of business investment, dropped unexpectedly by 0.7 percent after a downward revision in November. The decrease surprised economists surveyed by Reuters who expected a 0.2 percent increase for the month.

“I view the softness in business investment as a response to policy-related uncertainties, starting last summer with the imposition of tariffs on China, which raised the prospect of a trade war,” said Stephen Stanley, chief economist at Amherst Pierpont Securities, in a note to clients. “Those uncertainties were certainly greatly exacerbated by the federal government shutdown in December and January.”

Orders for primary metals fell 0.9 percent from November and shipments declined 1.3 percent.

The December advance report on manufacturers’ shipments, inventories and orders, delayed by the partial government shutdown, follows:

New Orders

New orders for manufactured durable goods in December increased $3.0 billion or 1.2 percent to $254.4 billion, the U.S. Census Bureau announced today. This increase, up two consecutive months, followed a 1.0 percent November increase. Excluding transportation, new orders increased 0.1 percent. Excluding defense, new orders increased 1.8 percent. Transportation equipment, up four of the last five months, led the increase by $2.8 billion or 3.3 percent to $90.2 billion.

Shipments

Shipments of manufactured durable goods in December, up four of the last five months, increased $2.1 billion or 0.8 percent to $259.7 billion. This followed a 1.0 percent November increase. Transportation equipment, also up four of the last five months, led the increase by $1.4 billion or 1.5 percent to $91.4 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in December, down three consecutive months, decreased $1.1 billion or 0.1 percent to $1,180.1 billion. This followed a 0.2 percent November decrease. Transportation equipment, also down three consecutive months, drove the decrease by $1.2 billion or 0.1 percent to $811.1 billion.

Inventories

Inventories of manufactured durable goods in December, up 23 of the last 24 months, increased $0.9 billion or 0.2 percent to $414.7 billion. This followed a 0.4 percent November increase. Primary metals, up 25 of the last 26 months, led the increase by $0.4 billion or 1.1 percent to $36.6 billion.

Capital Goods

Nondefense new orders for capital goods in December increased $2.8 billion or 3.7 percent to $77.8 billion. Shipments increased $0.4 billion or 0.5 percent to $80.0 billion. Unfilled orders decreased $2.2 billion or 0.3 percent to $708.1 billion. Inventories increased $0.5 billion or 0.3 percent to $181.5 billion. Defense new orders for capital goods in December decreased $1.0 billion or 7.0 percent to $13.3 billion. Shipments increased $0.5 billion or 4.1 percent to $12.5 billion. Unfilled orders increased $0.8 billion or 0.5 percent to $157.1 billion. Inventories decreased $0.2 billion or 1.0 percent to $22.7 billion.

Revised November Data

Revised seasonally adjusted November figures for all manufacturing industries were: new orders, $499.9 billion (revised from $499.2); shipments, $506.0 billion (revised from $505.1 billion); unfilled orders, $1,181.3 billion (revised from $1,181.5 billion); and total inventories, $681.3 billion (revised from $681.1 billion).