New orders for U.S. manufactured durable goods spiked by much more than expected in the month of January, according to a report released by the Commerce Department on Thursday.
The report said durable goods orders soared by 3.4 percent in January after jumping by an upwardly revised 1.2 percent in December.
Economists had expected durable goods orders to surge up by 1.1 percent compared to the 0.5 percent increase that had been reported for the previous month.
“Headline durable goods orders completed their recovery in January, rising above their pre-pandemic level,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics. “We expect activity to stay well-supported as buoyant orders signal shipments have further room to run.”
The much bigger than expected increase in durable goods orders was partly due to a spike in orders for transportation equipment, which shot up by 7.8 percent in January after inching up by 0.1 percent in December.
Orders for non-defense aircraft and parts skyrocketed by 389.9 percent in January after plunging by 56.7 percent in the previous month, reflecting fewer net cancellations at Boeing (BA).
Excluding the sharp increase in orders for transportation equipment, durable goods orders still jumped by 1.4 percent in January after spiking by an upwardly revised 1.7 percent in December.
Ex-transportation orders had been expected to climb by 0.7 percent, matching the increase that had been reported for the previous month.
Orders for electrical equipment, appliances and components, primary metals and fabricated metal products all showed significant increases.
The report also said orders for non-defense capital goods excluding aircraft, a key indicator of business spending, rose by 0.5 percent in January after jumping by 1.5 percent in December.
Shipments in the same category, which is the source data for equipment investment in GDP, surged up by 2.1 percent in January after climbing by 1.0 percent in the previous month.
“That suggests equipment investment growth is on track for a strong 15% annualised in the first quarter, albeit down from a red-hot 25% in the fourth,” said Andrew Hunter, Senior U.S. Economist at Capital Economics.
He added, “With investment already above pre-pandemic levels, that pace of growth won’t be sustained indefinitely, but the still-low level of interest rates and upbeat survey evidence are consistent with growth remaining solid over the months ahead.”
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