U.S. durable goods orders fall sharply in January

January durable goods orders in January dropped sharply. The headline durable goods orders fell 3.7 percent sequentially, as compared with consensus expectations of a fall of 2 percent. Moreover, the figure for December was downwardly revised by two-tenths at the headline level. Most of the fall in January was driven by transportation orders that dropped 10 percent sequentially. Stripping transportation, durable goods orders fell 0.3 percent on a sequential basis.

Delving into details, the decline in transportation orders was driven by a sharp fall in nondefense aircraft orders of 28.4 percent, which is consistent with Barclays’ expectation. This category is typically volatile, and a retreat of this magnitude, after the sharp rise in December is not unusual. In the meantime, orders in most other categories fell modestly, except computers & electronics. Core capital goods orders dropped 0.2 percent sequentially and core capital goods shipments rose modestly by 0.1 percent.

Softer-than-expected durable goods orders suggest lower equipment investment in the first quarter compared to what was expected earlier to the report, noted Barclays in a research report. Moreover, manufacturers’ durable goods inventories were below expectations, lower estimate of inventory accumulation in the first quarter, added Barclays.

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