New orders for manufactured durable goods increased by 3.1 percent in December, to $221.9 billion, helped by continued strength in orders for aircraft.
The Commerce Department said Friday that, excluding transportation, new orders rose by 2.3 percent, and excluding defense orders, new orders jumped by 3.9 percent.
Transportation equipment, up four of the last five months, had the largest increase, up 4.8 percent, helped by nondefense aircraft and parts.
Shipments of manufactured durable goods, up four of the last five months, increased 0.8 percent, while unfilled orders, seen as a sign of future demand, increased by 2.3 percent, to the highest level since 1992.
Inventories of manufactured durable goods in December, up eleven of the last twelve months, increased 0.4 percent to $296.0 billion. This followed a 0.3 percent November increase. Machinery, up nine of the last ten months, had the largest increase, up 1.5 percent to $47.1 billion.
The monthly report on durable goods is among the more volatile economic indicators, but nevertheless can be a key barometer of the health of the manufacturing industry. The latest overall increase of 3.1 percent was a bit less than what economists were projecting (closer to 4 percent), but is an indication that manufacturers are weathering the current slowdown in decent shape.
Recent regional reports on manufacturing have been generally mixed, and the Institute for Supply Management will unveil its widely watched monthly report next week.“The 3.1 percent increase in new orders for durable goods and 2.4 percent increase in nondefense capital goods, excluding aircraft, in December is a positive sign that the manufacturing slump is a pause, not a recession, and is starting to turn around,” said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. “With manufacturing capacity utilization above 80 percent and the unemployment rate at only 4.5 percent, the economy is experiencing constraints that require machinery and other capital goods to alleviate. It is the big ticket consumer items like housing and autos which are weighing down the industrial sectors."