Preview: Due March 13 - U.S. January Durable Goods Orders - Aircraft to slip, but ex transport trend is positive
We expect January durable goods orders to see a second straight moderate decline, of 0.6%, as a November surge in aircraft orders continues to correct, but ex transport we expect continued underlying strength to be shown, with a rise of 0.7%.
Boeing orders suggest aircraft will slip further from an exceptionally strong November, leading a 3.0% decline in transport, but they will remain at a firm level. We also expect a weak month from autos and a correction lower in defense, which has a strong overlap with transport, from a strong December, but the outlook for defense orders remains positive. We expect orders to fall by 0.3% ex defense.
ISM manufacturing new orders saw a sharp pick up in January and manufacturing output was firmer in January, suggesting ex transport orders will maintain a strong trend. A 0.7% increase would be a ninth straight rise but not quite as strong as December’s 1.0%, with a 3.1% December increase in computers and electronics looking difficult to repeat.
We expect non-defense capital orders ex aircraft, a key indicator of business investment, to outperform the ex-transport series with a rise of 1.0%. This series has outperformed ex transport orders in most recent months, though December, when a 0.8% increase was seen, was an exception.
