• Durable goods orders expected to decline in January, ex-transport unchanged
  • Business spending forecast to recover after two negative months
  • Non-defense orders in December were strongest in four months

The US Census Bureau will release its manufacturer’s new orders for durable goods report for January on Wednesday March 13th at 8:30 am EDT, 12:30 GMT.


New orders for durable goods are predicted to fall 0.5% in January following December’s 1.2% gain.  Orders excluding those of the transportation sector will rise 0.1% as they did in December. Business orders, specifically non-defense capital goods minus aircraft, is projected to rise 0.1% after falling 1% in December.  Durable goods orders ex-defense procurement rose 1.9% in December.

Durable goods and retail sales

This series is a subset of retail sales and tracks an expansive range of manufactured products for the consumer and industrial markets that are designed to last three years or more in use.  From industrial turbines to aircraft, from cellphones, headphones and earbuds to clothing, chopsticks and clocks, the orders give an overall snapshot of individual and household consumption and business investment in the economy. 

The December retail sales figures are still reverberating through US economic analysis. At -1.6% overall, and -2.3% for the GDP relevant control figure they have been at odds with almost all other consumption information for the holiday season.


Durable goods are another point of contention. The goods orders excluding those of the transportation sector, in practice the new airliner orders of the Boeing Company of Chicago, a particularly volatile figure, were 0.1% higher in December as they are forecast to be in January.  Retails sales in comparison were down 1.6% in December and recovered to 0.2% in January.

The volatility of the overall durable goods orders fostered by the variability of Boeing’s order book is illustrated in the accompanying graph.


Durable Goods Orders: Control Group

Business investment is considered one of the three major sources of US economic activity. The others are government spending and the largest sector, about 70% of GDP, consumption or consumer spending.

The durable goods category called the control group, officially and as above, non-defense capital goods minus aircraft--the logic for excluding aircraft is the same as for the ex-transport figure--is an oft cited proxy for business capital spending. It is not, as in the retail sales control number, the specific figure used in the Bureau of Economic Analysis computation of GDP, but a similar measure useful for general discussion.

Business spending has fallen in four of the five months prior to January. The decline came after the strongest 12 months for business investment to July in five years.  The yearlong rise in capital goods spending mirrored the steady increase in consumer and business sentiment that followed the Presidential election in November 2016.  

Durable Goods and retail sales in January

Retail sales recovered in January from its unexpected and unexplained plunge in December.  Overall sales rose 1.8% from -1.6% to 0.2%, beating the flat forecast. The control group climbed 3.4% from -2.3% to 1.1%, almost doubling the 0.6% prediction.

Durable goods should have a similar performance. The headline number, incorporating as it does the Boeing order book, is of less interest than the ex-transport and non-defense ex-aircraft figures. A reasonable expansion in these categories will help allay the suspicion that the economy began to slow appreciably at the end of last year.





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