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Durable Goods Orders Up 1.8% in January

Feb. 27, 2017
Bookings for non-military capital goods excluding aircraft unexpectedly dropped 0.4% after a larger-than-expected 1.1% jump in December.

Orders for U.S. durable goods rebounded in January, a sign that companies remained upbeat at the start of the year.

Bookings for goods meant to last at least three years rose 1.8% after a 0.8% decrease in December, according to Commerce Department data released Monday. Bookings for non-military capital goods excluding aircraft — a proxy for future business investment — unexpectedly fell 0.4% after a 1.1% jump in the prior month that was larger than previously estimated.

Before January, demand for business equipment had shown marked improvement as companies grew more upbeat about the economy’s prospects and global markets began recovering. Faster growth, along with corporate tax reform and reduced regulations may spur investment, which has been a laggard during the current economic expansion.

Even with the latest decline, bookings for capital equipment increased at an 8.9% annualized pace over the three months ended in January, the fastest since 2014. Such investment includes machinery, computers and communications gear.

The median forecast of economists surveyed by Bloomberg for total durable goods called for a 1.6% gain. Economists’ estimates ranged from a drop of 1% to a gain of 4%. The prior month was initially reported as a decline of 0.5%.

Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, fell 0.6% after rising 1.6%. The durables report also showed bookings for commercial aircraft jumped 69.9% after a 9.3% increase.

Excluding transportation equipment, which is often volatile from month to month, orders fell 0.2% after a 0.9% gain. They were projected to climb 0.5%, according to the Bloomberg survey median.

Orders for military capital equipment rose 8%, and demand for non-defense durable goods increased 1.5%.

Durable goods inventories were little changed, while unfilled orders for non-defense capital goods excluding aircraft rose 0.5%.

By Shobhana Chandra, with assistance from Jordan Yadoo.

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