• 1 day he Token Boom Spawns Digital Gold Mine in Art, Collectibles
  • 2 days The “Oil Of The Future” Is Set To Soar In 2021
  • 2 days Wealthy Could End Up Footing The Bill For States’ Budget Shortfalls
  • 2 days Could This Be The Hottest Commodity Play Of 2021?
  • 3 days JP Morgan Says Fintech Will Steal The Disruptor Show
  • 5 days Facebook Plays Dirty Down Under
  • 5 days Could This Be The Most Exciting Lithium Play Of 2021?
  • 8 days China Sidelines US As EU’s New Top Trading Partner
  • 10 days 3 Smart Ways To Play the Global Chip Shortage
  • 11 days Flying Taxis Are The Number One Speculative Bull Arena
  • 12 days Ocean Power: The Missing Link
  • 17 days Luxembourg’s Ultra-Secrecy Still Attracts Hundreds Of Billionaires
  • 18 days Robinhood Is Under Fire And Trading ‘Democracy’ Is In Question
  • 19 days Bitcoin Could Be Worth $12 Trillion In The Long-Term
  • 20 days The Biggest Tech IPO Since Uber … For Farmers
  • 22 days The Biggest Boost Yet for the Cannabis Industry
  • 23 days Biden Administration Signs $231 Million Deal For At Home COVID Tests
  • 24 days China’s Tech Billionaire Ma Is Back And ‘Compliant’
  • 25 days Gamestop Crashes By 60% But The Story Is Far From Over
  • 27 days Crypto Crime Is Plummeting
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Durable Goods Orders Surge on Aircraft: Core Capital Goods and Autos Decline: Overall Weak Report

The headline durable goods orders for February beat the Econoday consensus and January was revised higher as well.

But once again, strength was due to aircraft orders. Core capital goods declined 0.1% vs an expectation of a 0.5% gain.

Aircraft has been giving a significant boost so far this year to durable goods orders which otherwise are soft. Durable goods orders jumped 1.7 percent in February to beat Econoday's consensus by 2 tenths. The data include an upward revision to January which now stands at a very strong 2.3 percent. But when excluding transportation equipment, which is where aircraft are tracked, durable orders slow to a 0.4 percent February gain which is well under the 0.8 percent consensus.

The weakest part of the report is perhaps the most important part, that is core capital goods (nondefense ex-aircraft) where orders slipped 0.1 percent in February vs expectations for a 0.5 percent jump and following January's revised 0.1 percent gain. This points to continued weakness in business investment and eventual trouble for GDP. Yet for the first quarter, core shipments in January and February, which are inputs into GDP, are a net positive, as a 1.0 percent February gain offsets a 0.3 percent January dip. Also unfilled orders for core capital goods are building, up 0.2 percent following gains of 0.5 and 0.4 percent in the two prior months.

Total unfilled orders for durables, however, are unchanged and follow a long string of declines. Inventory growth is modest at 0.2 percent with total shipments up 0.3 percent which keeps the inventory-to-shipments ratio unchanged at a stable 1.61.

Durables activity is improving but the strength has been tied largely to aircraft where sustained month-to-month gains are uncertain. And the strength also does not include new orders for capital goods. The major spikes for advance manufacturing readings have yet to translate to similar gains for government data.


Durable Goods Orders

Durable Goods Orders
Larger Image


Durable Goods Orders and Shipments

Durable Goods Orders and Shipments
Larger Image

The above table condensed and highlighted starting from Census.Gov.


Mish Comments

  1. Shipments feed into GDP so the immediate effect of the report should be minimal.
  2. Once again aircraft fueled the report, but aircraft orders have very long lead times and are subject to cancellation.
  3. Motor vehicles and parts (shipments and new orders) are both in the red.
  4. Core capital goods, a measure of future expansion of productive capacity, is flat over the last two months, much weaker than expected.


Alarm Bells

Despite the nice sounding headline numbers, this was actually a weak report when viewing the details.

Autos, which account for about 20% of retail sales are sounding alarm bells.


Related Articles

  1. Ally Financial Issues Profit Warning Over Used Car Prices: Jamie Dimon Says "It's Not Systemic"
  2. Used Car Prices Plunge Most in Any Month Since 2008, Only 2nd February Decline in 20 Years
  3. Consumer Sentiment Statistical Noise: Modern Day Snake Oil
  4. Industrial Production Flat, Manufacturing Jumps: Another Weather-Related Phenomenon?

The regional manufacturing reports have been upbeat. Actual measurements are something else.

 

Back to homepage

Leave a comment

Leave a comment