US durable goods orders jumped in January

The Commerce Department reported Thursday that new orders for long-lived manufactured goods jumped 4.9 percent in January to $237.5 billion, with the main contribution to the surge coming from the civilian aircraft sector, essentially from Boeing. Orders for motor vehicles and parts rose 3.0 per cent.

“It is not exactly a revival, but it is a hopeful sign that the worst of the manufacturing sector malaise has passed”, said Stephen Stanley, chief economist at Amherst Pierpont Securities.

USA durable goods orders bounced back in January but an underlying proxy for trends in investment in the wider economy was still well in the red. But it was still 4.4 per cent lower than January a year ago.

Excluding transportation equipment demand, which is volatile from month to month, bookings increased 1.8 percent in January after a 0.7 percent decline the prior month, according to the Commerce Department.

But shipments of core capital goods – used to calculate equipment spending in the gross domestic product report – fell 0.4 percent last month after advancing 0.9 percent in December. The gauge dropped 3.5 per cent in 2015, its largest annual decline since the recession ended.

Still, analysts cautioned against reading too much into one month of data.

The median forecast of 80 economists surveyed by Bloomberg projected total orders would increase 2.9 percent. The majority of the month’s gain was due to an increase in new orders for transportation equipment, which increased by 11.5 percent. Inventories increased by 0.2 percent in the previous month. And a category that tracks business investment plans showed a almost four percent increase, the most since June 2014.

Orders of core capital goods, which excludes defense products and aircraft, rose 3.9 percent after sliding by a revised 3.7 percent in December.

Thursday’s report comes amid mixed signals about where manufacturing is heading in the new year.

The Institute for Supply Management said USA factory activity shrank in January for a fourth straight month, as the strong dollar and weak demand overseas continued to squeeze American manufacturers. But January also saw a sharp rise in industrial production, a measure of output from manufacturing, mining and utilities, the Federal Reserve reported earlier this month.