U.S. durable goods orders grow solidly in December

U.S. durable goods orders rose strongly in December. They grew a solid 2.9 percent in December, while November’s gain was upwardly revised to 1.7 percent. Core capital goods orders dropped in December but November’s print was upwardly revised.

The headline print was driven by aircraft orders in the month; however, there was also strength excluding transportation, where orders grew 0.6 percent in December and November’s decline was upwardly revised. Defense orders rose strong by 19.5 percent.

Core capital goods orders, which strip aircraft and defense, were subdued as they dropped 0.3 percent. Consensus had expected a rise.

Shipments of core capital goods rose 0.6 percent, ending the fourth quarter on a strong note. This was corroborated by the GDP report that was also released today. Fixed investment for equipment rose 11.4 percent in the fourth quarter, adding 0.6 points to the 2.6 percent GDP growth print.

“The takeaway from the durable goods report today is that while the headline was strong, it was driven by defense and aircraft. Orders that indicate future business investment were down”, noted Wells Fargo in a research report.

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