Durable Goods Orders Fall in December

Jan. 28, 2014
Volatile transportation sector leads unexpected setback.

Durable goods manufacturers took a hit in December as new orders fell $10.3 billion to $229.3 billion, the U.S. Census Bureau reported. Analysts had expected durable goods orders to increase by 1.7% in December, led by strong orders for Boeing. However, transportation equipment led the decrease, down $7.7 billion or 9.5%. The category was pulled down by commercial aircraft and parts, which decreased $3.8 billion.

The setback in December, following a 2.6% gain in November, was indicative of a business sector that remained uncertain about both the U.S. and global markets, said Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI).

“Nondefense capital goods orders excluding aircraft, a leading indicator for overall business equipment investment, declined 1.3% in December following a strong 2.6% gain the prior month. The pattern of surge and setback was indicative of 2013. The fundamentals for business equipment investment are very favorable but firms remain hesitant to commit to long-term investments because of the clouds of uncertainty that persist, such as political gridlock at home and poor economic policies in our export markets abroad.” [MAPI]

Shipments of durable goods, up for the previous four months, also decreased in December, by $4.5 billion or 1.9% to $232.8 billion.

Unfilled orders for manufactured durable goods also rose in December, increasing $3.9 billion or 0.4% to $1.06 trillion. Inventories of manufactured goods, which had been up eight of the past nine months, rose again by $3 billion to $387.8 billion, a 0.8% increase.

The government adjusted November durable goods new orders down to $495.9 billion from $497.9 billion and shipments to $493.6 billion from $494.6 billion.

Despite the December setback, Meckstroth said, “MAPI remains optimistic that the pace of economic growth will accelerate in 2014. This economic pickup will be led by a faster pace of business equipment investment.”

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An award-winning editor, Executive Editor Steve Minter covers leadership, global economic and trade issues and energy, tackling subject matter ranging from CEO profiles and leadership theories to economic trends and energy policy. As well, he supervises content development for editorial products including the magazine, IndustryWeek.com, research and information products, and conferences.

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Steve received his B.A. in English from Oberlin College. He is married and has two adult children.

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