Factory Orders Confirm Slow Start to Equipment Spending
|Factory orders declined 1.4 percent in January, in line with expectations and largely confirming the cooling trend hinted in last week’s durable goods report. Core capital goods orders were down 0.3 percent in January.
Orders Suggest Slower Business Investment in Q1
- January marked the first decline in factory orders since July 2017, with the headline down 1.4 percent. Aircraft orders slipped in January, weighing on the headline, but core orders also fell.
- The 0.3 percent fall in core capital goods orders, our proxy for future equipment spending in GDP, does not bode well for future activity. Shipments in the category also ticked down 0.1 percent in January, which is a direct input in the GDP calculation.
Survey Says Orders are Up, Hard Data Says Otherwise
- Not only did core capital goods and shipments turn negative in January, but the pipeline does not look much better, as unfilled orders for the category declined for the second straight month.
- The ISM new orders index has been hovering near cycle highs as recently as February, yet hard data is pointing to cooling activity at the start of the year, at least for manufacturers of durable goods. Nondurable goods orders were up 0.8 percent in January.
Download The Full Economic Indicators
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.