U.S. durable goods orders rose above consensus expectation in December. The new orders surged 2.4 percent, as compared with expectations of a rise of 0.3 percent. The rise was slightly driven by a downward revision of 1 percent to bookings in November, but the new results were still firmer than anticipated. The unexpected result was mainly seen in the transportation category, where high volatility resulted in a net rise of 7.6 percent.
Within transportation, orders for commercial aircraft were weak, as orders fell 74.7 percent after a fall of 28.4 percent in November. The level of orders for commercial aircraft was not a record low, but it was close to the bottom of the historical range.
Motor vehicles’ orders dropped 0.9 percent, remaining weak that now continues over four months. These soft areas were countered by a sharp rise of 168.3 percent in orders for defense-related aircraft. A surge in this area was not surprising, as orders had moved to the low portion of the historical range in November.
“We had looked for a return to the midpoint of the recent range, but they surged to the upper portion”, said Daiwa Capital Market Research in a report.
Moreover, miscellaneous transportation items also recorded big surprise, where orders rose sharply by 71.1 percent and moved to a record level. However, the report does not have detail for this area.
Meanwhile, elsewhere in the report, the data was weak, with orders excluding transportation fell 0.1 percent. The fall is a pattern of unimpressive results that started in the closing months of last year and have left a downward drift in new orders excluding transportation.
Nondefense capital goods orders other than aircraft merit special attention because of the insight provided for capital spending, and this category recorded disappointing results with a fall of 0.9 percent.
