Economy

Durable Goods Orders Rebound 2.4 Percent on Military Spending

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).