Durable Goods Orders Virtually Flat in January

Real durable goods new orders in January 2016 were $209,075 million. Compared with one year ago, durable goods new orders were down just 0.5 percent. Other than the one month of increase in November, this was the best month-over-month rate of change since January 2015. As a result, the annual rate of change, now -4.6 percent, has stabilized the last four months. And, it appears that the annual rate of change should begin contracting at a slower rate in the next month or two, which would be a positive sign for manufacturing.

Motor vehicle and parts orders increased at a rate of 6.1 percent compared with one year ago. That was the 14th straight month that MV&P orders increased. However, the annual rate of change was down from its peak rate of growth in November. It looks like the decelerating growth trend will continue in the upcoming months, although the rate of growth should not fall too much. 

Aerospace orders increased 35.3 percent compared with one year ago. That was the fastest rate of monthly growth since July 2014. Also, it was the third time in four months that aerospace orders grew compared with one year ago. Annually, aerospace orders contracted at a decelerating rate for the fifth consecutive month. The current contraction is mostly due to a single, extremely large month of orders in July 2014. This positive trend in aerospace orders should continue in upcoming months as the quarterly rate of change has been growing at a faster rate for three months.

We use real durable goods new orders to forecast activity in metalcutting job shops, metalworking, and durable goods.