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    A Spate of Durable Goods Orders

    After falling for two months in the holiday shopping season durable goods orders returned to U.S. factories with a rush, tempering the year long decline in manufacturing.

    Booking for items designed to last more than three years jumped 4.9 percent in January, close to double the 2.9 percent median forecast and December's 4.6 pedant decline was smaller than initial reported, according to the Commerce Department in Washington D.C. today.

    Orders ex-transport that is without the civilian aircraft sector rose 1.8 percent in January, well beyond the 0.3 percent forecast. The December result was revised up to -0.7 percent from -1.0 percent.  

    Boeing Company of Chicago, the largest U.S maker of commercial aircraft, and by far the biggest contributor to the aircraft sector, said it received 67 new orders in January following 223 the month before which had been the most in a year.

    "Core Capital goods" orders, the oft quoted proxy for business investment spending and officially called 'capital goods orders non-defense ex aircraft' or core capex for short, rose 3.9 percent in January, its best score since June 2014. The median estimate from the Bloomberg survey of economists was for a 1.0 percent gain.  

    On the year core capital goods orders declined 4.4 percent, an improvement from December’s 6.5 percent drop but still the 13th straight month of negative annual orders. 

    Overall durable goods orders rose 0.6 percent in the 12 months to January up from December’s 1.2 percent decrease. Over the past year annual orders have fallen in 9 months and risen in 3. 

    Most categories of goods saw demand rise led by automobiles, electronic goods and machinery but orders in the extraction industries, mining and drilling, and for farm equipment remained moribund, battered by the collapse in commodity prices and the strong dollar. 

    Machinery orders jumped 6.9 percent in January, the most in three years. Orders for cars rose 3 percent, the largest increase in half a year, while demand for communications equipment of all types made the best showing since November 2014.

    Shipment of the above noted "core capital goods, the category of industrial production incorporated into the government’s gross domestic product calculations, slipped 0.4 percent in January about even with the -0.5 percent forecast. The December figure was adjusted substantially higher to 0.9 percent from 0.2 percent. Shipments were down 3.3 percent from January 2015. 

    The first revision of fourth quarter GDP will be issued by the Commerce Department on Friday. The initial 0.7 percent annualized number is expected to decline to 0.4 percent, which if correct would be the lowest quarterly figure since the first three months of 2014 when the U.S. economy contracted 0.9 percent.  

     

    Joseph Trevisani

    Chief Market Strategist

    WorldWideMarkets Online Trading

    Charts: Bloomberg

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