Durable Goods Orders Fall on Volatile Airplane Orders

- Durable Goods Orders for January fell 10.2% versus an upwardly revised 2.5% increase in December.
- Durables Ex Transportation for January rose .6% versus an upwardly revised 1.9% gain in December.

BOTTOM LINE: A decline in commercial aircraft demand last month caused a large drop in Durable Goods Orders, even as factories reported stronger sales of business equipment. The third straight gain in orders excluding autos and commercial planes was the best stretch since July through Sept. 2004. Orders for non-defense capital goods excluding aircraft, a gauge of future business spending, fell .4% versus a .5% increase the prior month. However, unfilled orders of business equipment rose .6% and communications equipment orders soared 16.7% in January. Orders for appliances and electrical equipment increased 2.7% in January. Economists expect the US economy to grow 4% this quarter versus a historical average of 3.1%. The headline Durable Goods number was due for a fall after airline production soared last quarter. I expect a nice rebound this month. Overall, it appears business spending is accelerating and should add meaningfully to US growth this year helping to offset a slowing housing market.