U.S. factory orders fall sequentially in January

U.S. factory orders dropped in the month of January on a sequential basis. Factory orders fell 1.4 percent, consistent with consensus expectations, but fared a touch better than expected. The fall in January comes on the heels of a disappointing preliminary report on durable goods orders, which dropped 3.7 percent decline in total orders. But, today’s factory orders report included revisions to the durable goods orders data as well. Growth in total durable goods orders was upwardly revised by one-tenth, and growth in durable capital goods orders, which rose 0.8 percent on the month.

Overall, today’s report was widely consistent with the projections. But, downward revisions to core capital goods orders and shipments imply more weakness in the core categories than we had expected. This suggests slightly lower equipment investment in the first quarter. Moreover, non-durable goods inventories were weaker than expected and suggest lower inventory accumulation.

“However, taken together, our Q1 GDP tracking estimate was left unchanged at 1.7 percent q/q saar, after rounding”, added Barclays.

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