Orders for durable goods surge
Manufacturing sector posts its 9th straight monthly gain
U.S. orders for durable goods surged in January by the most in six months, extending the manufacturing sector’s steady rebound from the shutdowns last spring.
Bookings for durable goods — or items meant to last at least three years — increased 3.4% from the month before, Commerce Department figures showed Thursday.
Orders for goods meant to last at least three years have now risen nine straight months, another sign that manufacturing has proven resilient in the face of the coronavirus pandemic.
The January gain — triple what economists had expected — followed upticks of 1.2% in December and 1.3% in November. Orders have now surpassed pre-pandemic levels; they’re up 3.5% from a year earlier.
“Durable goods are putting the pandemic in the rearview mirror,” economists Oren Klachkin and Gregory Daco of Oxford Economics said in a research note, adding that “factory activity will expand solidly in the near term, driven by hearty consumer demand for goods and inventory restocking.” President Joe Biden’s financial relief package, being debated in Congress, is likely to “pad consumers’ wallets and buoy the near-term outlook.”
Orders for civilian aircraft and parts jumped 389.9%. Excluding transportation equipment, which can bounce wildly from month to month, durable goods orders were up 1.4% after a 1.7% December gain.
Core capital goods orders, a category that excludes aircraft and military hardware and is seen as a barometer
of business investment, rose 0.5% after an upwardly revised 1.5% gain.
Orders for computers and related products climbed 8.7% in January, while bookings for electrical equipment and appliances rose 4.2%.
While total factory production has not quite reached pre-pandemic levels, the value of core business goods orders is well above where it was a year ago. They rose to a fresh record high last month, helped by more bookings for computers and electrical equipment.
Shipments of nondefense capital goods minus aircraft, used to calculate business investment in the government’s gross domestic product report, jumped 2.1% in January, the most in three months.
Fiscal relief paired with more widespread vaccinations and prospects of infrastructure spending should support business investment in the months ahead.
The report follows a broad-based, fourth straight monthly gain in manufacturing production in January. Regional Federal Reserve measures of factory activity have been more mixed, however, and the Institute for Supply Management’s manufacturing index eased last month.
Rebuilding diminished inventories has also been a key tailwind for factories. The value of durable goods inventories shrank 0.3%, after falling 0.2% in December.
A separate Commerce Department report Thursday showed gross domestic product grew at a revised 4.1% annualized pace in the fourth quarter, little changed from a preliminary estimate of 4%.