Durable Goods New Orders Slow In January 2018

The headlines say the durable goods new orders and backlog declined. However, the unadjusted three month rolling average improved.

Analyst Opinion of the Durable Goods Situation

I consider this a strong report as the rolling averages significantly improved. Civilian and defense aircraft were the main drag this month.This series has wide swings monthly so our primary metric is the unadjusted three-month rolling average.

Econintersect Analysis:

unadjusted new orders growth decelerated 0.8 % (after accelerating 0.2 % the previous month) month-over-month, and is up 8.9 % year-over-year.

the three month rolling average for unadjusted new orders accelerated 2.0 % month-over-month, and up 9.4 % year-over-year.

Year-over-Year Change of 3 Month Rolling Average – Unadjusted (blue line) and Inflation Adjusted (red line)

z durable1.png

Inflation-adjusted but otherwise unadjusted new orders are up 7.4 % year-over-year.

Backlog (unfilled orders) was unchanged month-over-month and is up 1.9 % year-over-year.

The Federal Reserve’s Durable Goods Industrial Production Index (seasonally adjusted) growth up 0.2 % month-over-month, up 2.5 % year-over-year [note that this is a series with moderate backward revision – and it uses production as a pulse point (not new orders or shipments)] – three month trend is accelerating.

Comparing Seasonally Adjusted Durable Goods Shipments (blue line) to Industrial Production Durable Goods (red line)

note this is labelled as an advance report – however, backward revisions historically are relatively slight.

Census Headlines:

new orders decreased 3.7 % month-over-month.

backlog (unfilled orders) declined 0.3 % month-over-month.

the market expected (from Bloomberg/Econoday):

Consensus Range Consensus Actual New Orders – M/M change -4.5 % to -0.3 % -2.0 % -3.7 % Ex-transportation – M/M 0.0 % to 0.8 % +0.4 % -0.3 % Core capital goods – M/M change 0.1 % to 1.0 % +0.6 % -0.2 %