• 2 days 3 Restaurant Stocks In Full Recovery Mode
  • 2 days Bitcoin Is Driven By Testosterone
  • 7 days Quantum Computing Is The Newest Megatrend In Silicon Valley
  • 8 days How To Invest In The Cybersecurity Boom
  • 10 days Investors Are Patient With Unprofitable Giants
  • 12 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 14 days 5 Stocks To Keep A Close Eye On This Year
  • 15 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 16 days Central America Is Ready For The Bitcoin Hustle
  • 18 days China’s Video Game Restrictions Unlikely To Slow Down Booming Industry
  • 19 days Top Performing Stocks As Inflation Fears Grow
  • 20 days US Airline Stocks Take A Beating On New EU Restrictions
  • 21 days This IPO Could Open Sustainable Fashion Floodgates
  • 22 days Crypto Crime Nets Another $2B Fraudster
  • 24 days This Week’s Hottest Meme Stocks
  • 25 days Why World Markets Should Be Watching Germany Closely
  • 27 days Could ‘Cultured’ Meat Rival The Plant-Based Megatrend?
  • 29 days ‘Easy Money’: Crypto Is Still Attracting Newbie Investors
  • 31 days Foreign Syndicates May Have Stolen Up To $400B In COVID Benefits
  • 32 days Gold Jumps Above $1800 Ahead Of Jackson Hole Summit
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

  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