A quick look at new durable goods orders

US durable goods orders rose by 4.6% in December, up 10.046bn, driven almost single-handedly by defense capital goods orders, which rose 8.7bn.   Non defense aircraft and parts brought up the rearguard.

Shorter term data on new orders shows a strong recovery since the summer, but longer annual data shows a clear slowdown in order growth.

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Especially if we exclude transportation and defense:

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It will be interesting to see to what extent order growth may have peaked, if this is what is happening.  

Overseas weakness (Japan and Europe) and the impact of further gross fixed capital investment in China, over the short term, may also be vitiating variables as will eventual cutbacks in US government expenditure. 

There is also some concern over the future pace of motor vehicle and parts orders, given the dependence of the GDP PCE component on reduced savings and non revolving credit growth and the impact of higher taxes and fiscal retrenchment.  MVP output has had a good run, as has consumer spending of late.

Inventory growth in the report also slowed down significantly, a fact now reflected in the first Q4 GDP estimate.  Whether this is due to an awareness of weaker demand going forward or merely a response to the strong recovery in demand since the summer declines is another matter. 

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