Durable-goods orders drop 5.2% in January

posted at 6:01 pm on February 27, 2013 by Ed Morrissey

I have to admit, I was briefly taken aback when I first read the headline at CBS News about the durable-goods report released this morning.  “Orders jump for most long-lasting factory goods,”it read, and CNBC’s sounded similarly cheery — “Factory Orders Fly Even As Defense in the Dumps.”  Why not just report the topline results, I wondered?

This is why:

New orders for manufactured durable goods in January decreased $11.8 billion or 5.2 percent to $217.0
billion, the U.S. Census Bureau announced today. This decrease, down following four consecutive monthly increases, followed a 3.7 percent December increase. Excluding transportation, new orders increased 1.9 percent. Excluding defense, new orders decreased 0.4 percent. Transportation equipment, down three of the last four months, drove the decrease, $14.7 billion or 19.8 percent to $59.7 billion. This was led by defense aircraft and parts, which decreased $5.1 billion.

Transportation is a rather volatile industry, and defense spending has been cut even before the sequester hits.  Neither of these are a big surprise in turning negative.  However, the report isn’t all that cheery even when looking at the results without each.  A rise of 1.9% excluding transportation is positive, but “jump” seems a bit much.  Excluding defense and including transportation, orders went down 0.4%, and that’s not impressive at all.

The AP, whose report CBS published, focuses on core capital goods for its sunny disposition:

The Commerce Department says orders for so-called core capital goods, which include machinery, equipment and software, rose 6.3 percent in January from December. A sharp drop in demand for commercial aircraft caused overall durable goods orders to drop 5.2 percent, the steepest since August. …

The increase in core capital goods suggests companies are willing to expand their production capacities despite worries that automatic government spending cuts that kick in Friday will slow the economy in the coming months.

So did CNBC:

A gauge of planned U.S. business spending increased by the most in just over a year in January and new orders for long-lasting manufactured goods excluding transportation rose solidly, pointing to underlying strength in factory activity.

True, but the backlog is also disappearing, while inventories are rising again:

Unfilled Orders. Unfilled orders for manufactured durable goods in January, down following four consecutive monthly increases, decreased $2.1 billion or 0.2 percent to $989.2 billion. This decrease followed a 0.8 percent December increase. Transportation equipment, also down following four consecutive monthly increases, drove the decrease, $5.0 billion or 0.9 percent to $582.8 billion.

Inventories. Inventories of manufactured durable goods in January, up fifteen of the last sixteen months, increased $0.7 billion or 0.2 percent to $374.8 billion. This increase followed a 0.1 percent December decrease. Transportation equipment, up thirty consecutive months, drove the increase, $1.1 billion or 0.9 percent to $115.8 billion.

The market reaction seems to indicate that investors see this report more positively, although CNBC doesn’t seem to be able to distinguish as to whether that’s because of the rise in core capital investment or the Fed’s decision to keep monetary policy loose:

U.S. stock index futures were higher Wednesday following the durable goods orders report and ahead of Fed Chairman Ben Bernanke’s second round of testimony, but ongoing worries over political deadlock in Italy kept a lid on gains. …

Tobias Blattner, a euro zone economist at Daiwa Capital Markets, saw little grounds for optimism regarding Italy.

“Even if a Bersani minority-led government or a grand coalition between Berlusconi and Bersani ultimately emerges from the elections, it will be a weak government that is unlikely to survive for long as the experience of the past year (decades) or so suggests. So, what seemed to have emerged as the smallest common denominator – to avoid new elections – looks ultimately inevitable to us,” Blattner wrote in a note.

However, global market sentiment was boosted by Federal Reserve Chairman Ben Bernanke’s speech on Tuesday, which helped soothe fears the Fed might end its asset purchases earlier than forecast.

The core business investment increase is good news, but the cheeriness reminds me of the rush in the media to explain away the -0.1% Q4 GDP contraction in the initial estimate from Commerce as somehow good news, too, and for the same reason (increased business investment).  The slack demand still should be a concern, especially with Europe teetering again.  The momentum behind business investment won’t last if demand doesn’t follow, and so far we’re not seeing that happen.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

clearly it was the non-existant cut in spending that hasn’t happened yet./msm

rob verdi on February 27, 2013 at 6:03 PM

There is so much muck in the ocean of our economy at this point, none of these indicators are as indicative as they used to be, if you will.

Its a zombie economy, much like we experienced in the 1930′s unfortunately.

Ca97 on February 27, 2013 at 6:05 PM

More lies coming from Obummer, count on it.

Philly on February 27, 2013 at 6:06 PM

Is the Feds printing of dollars considered manufacturing?

WashJeff on February 27, 2013 at 6:08 PM

Is that caption photo with Obama and the giant screw a coincidence I wonder?

moo on February 27, 2013 at 6:08 PM

Pravda doing what Pravda does.

Rational Thought on February 27, 2013 at 6:09 PM

…as I have suspected and have posted, all of Obama’s irrational ranting on the sequester is an attempt to lay blame for the upcoming recession (two consecutive quarters on negative growth) on someone other than himself.

Tater Salad on February 27, 2013 at 6:11 PM

DOTUS 24/7.

Break the country that was founded with “negative rights” and offer something new and transformative.

And the bigger and more often the crisis……..the better.

PappyD61 on February 27, 2013 at 6:13 PM

Once the media is convinced that Obama’s spin has thoroughly corrupted public opinion they will stop sugar-coating bad news so that Republicans and spending cuts get blamed for it.

Wigglesworth on February 27, 2013 at 6:14 PM

How dead is the republican party……..

Mark Levin has to drag out Ronald Reagan from 1992.

https://www.youtube.com/watch?v=WxL3OU1dwmI

It’s that bad folks.

PappyD61 on February 27, 2013 at 6:15 PM

if we just raised taxes on the rich even more… to pay the fair share this would not happen!

watertown on February 27, 2013 at 6:18 PM

Is the Feds printing of dollars considered manufacturing?

I’d consider it close to counterfeiting. Give it a little time and all that printed cash will just be more funny money. A couple trillion of it wouldn’t buy you a roll of toilet paper.

hawkeye54 on February 27, 2013 at 6:18 PM

…as I have suspected and have posted, all of Obama’s irrational ranting on the sequester is an attempt to lay blame for the upcoming recession (two consecutive quarters on negative growth) on someone other than himself.

As is always the case for such a self-absorbed narcissist.

hawkeye54 on February 27, 2013 at 6:20 PM

but “jump” seems a bit much.

Somewhere, George Orwell is laughing his ass off!

GarandFan on February 27, 2013 at 6:23 PM

Let’s party like it’s 1933!

VorDaj on February 27, 2013 at 6:24 PM

Let’s party like it’s 1933!

We’re also on the verge of partying like its 1776.

hawkeye54 on February 27, 2013 at 6:26 PM

I know she’s just a state rep. in Connecticut but let’s hope this doesn’t catch on.

Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.

Cindy Munford on February 27, 2013 at 6:28 PM

Lie to me bayam.

I need a hit.

tom daschle concerned on February 27, 2013 at 6:28 PM

Is the Feds printing of dollars considered manufacturing?

WashJeff on February 27, 2013 at 6:08 PM

Depends on how long it is before the Fed’s issue this as the newest American currency. If http://thewildernessofmirrors.wordpress.com/2013/02/25/obama-the-great-destroyer/ isn’t the actual Anti-Christ, then he has to be a close relative maybe even Gozer the Gozerian, also known as Gozer the Destructor, the destroyer of worlds.

SWalker on February 27, 2013 at 6:32 PM

Barry needs sequester – so he’s got something to blame this new recession on.

TarheelBen on February 27, 2013 at 6:36 PM

Obama, the Lilliputian in Chief, doesn’t feel your pain.

Schadenfreude on February 27, 2013 at 6:36 PM

And tell us about Walmart’s sales. TANKING.

CW on February 27, 2013 at 6:37 PM

I know she’s just a state rep. in Connecticut but let’s hope this doesn’t catch on.

Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.

Cindy Munford on February 27, 2013 at 6:28 PM

Yup…and should it catch on, then personal savings and investment accounts are next, followed by just about everything individuals have saved up:

Government: “You’ve got too much money in the bank (We determine that on a flexible scale). Turn it over so we can redistribute your excess to whom we see fit to get it. Got more than 3 days worth of food? Turn it over so it can be redistributed as we see fit.”

The possibilities, oh, the possibilities.

hawkeye54 on February 27, 2013 at 6:38 PM

Barry needs sequester – so he’s got something to blame this new recession on.

Meh, sequester or no sequester, Barry has his list of the usual suspects to blame for anything that goes wrong.

hawkeye54 on February 27, 2013 at 6:39 PM

Core numbers were solid, so the markets took off. Combine with the strong housing numbers this week and the unexpected big jump in consumer confidence on Tues, and we have the Dow within striking distance of a record high. Tomorrow’s GDP revision may be just what the doctor ordered: With the Dec trade deficit narrowing, we should see the 4Q12 GDP number pop … time will tell, but even we’re beginning to wonder when a correction will happen. Year is off to strong start, and if we get through March without the politicians screwing up too badly, the race to 15K will be on … Let It Ride …

TouchdownBuddha on February 27, 2013 at 6:41 PM

. Year is off to strong start,
TouchdownBuddha on February 27, 2013 at 6:41 PM

Does the DNC pay you? I don’t think you understand the word strong.

CW on February 27, 2013 at 6:50 PM

If things are so rosy, why are retail sales down (checked those WallyWorld numbers lately?)?
Q1 will be lucky to stay even with Q4, and two consecutive quarters of negative growth….
Bush did it!

Another Drew on February 27, 2013 at 6:55 PM

PappyD61 on February 27, 2013 at 6:15 PM

The Dems ran against Hoover for 40-years, so your point is?

Another Drew on February 27, 2013 at 6:57 PM

OT: Bob Woodward just said on CNN that a top official from this admin sent him an e-mail and said, “you’re going to regret doing this.” They are threatening him. What a bunch of thugs!

TarheelBen on February 27, 2013 at 6:59 PM

Millions of people get their tax returns back around this time of the year, spend them and then the bean counters get excited over an always temporary “rise” in spending. It happens every year yet it’s always a “surprising jump” followed by an “unexpected” decline..

HotAirian on February 27, 2013 at 7:01 PM

hawkeye54 on February 27, 2013 at 6:38 PM

I’ve heard that some of the creeps at the national level have discussed going after IRAs and 401ks.

Cindy Munford on February 27, 2013 at 7:03 PM

TarheelBen on February 27, 2013 at 6:59 PM

I hope they are stupid enough to keep doing it.

Cindy Munford on February 27, 2013 at 7:04 PM

And tell us about Walmart’s sales. TANKING.

CW on February 27, 2013 at 6:37 PM

That…is very, VERY bad.

If Cheap-O-Rama can’t sell stuff, neither can anyone else.

MelonCollie on February 27, 2013 at 7:08 PM

…where are the trolls to explain this to us?

KOOLAID2 on February 27, 2013 at 7:09 PM

I know she’s just a state rep. in Connecticut but let’s hope this doesn’t catch on.

Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.

Cindy Munford on February 27, 2013 at 6:28 PM

The Democrats in this country should be referred to as AMERICAN COMMUNISTS. THAT is what they are.

After all, if you didn’t build that because the government built the road then follow their logic…..the government OWNS EVERYTHING.

It’s like I died and came back in 1916 Russia as Lenin is out talking to the poor.

PappyD61 on February 27, 2013 at 7:09 PM

…where are the trolls to explain this to us?

They are too busy right now, over at the Washington Post site attacking Bob Woodward.

hawkeye54 on February 27, 2013 at 7:15 PM

I hope they are stupid enough to keep doing it.

Sure, and they probably have plenty of stupid supporters drooling and dreaming about all possibilities of the goodies redistributed their way.

We got it. The Gimmiecrats want it. Government will act as the middlemen.

hawkeye54 on February 27, 2013 at 7:18 PM

…..and if “you didn’t build that” and we owe our businesses to the government because of the roads and bridges they built (ahem, we paid for).

Progressive logic:

Then you really owe your job to the government because they built the infrastructure for you to get to work.

And they built the streets and sidewalks, and zoned your neighborhood and provided the police and fire for you to own your own house. So you don’t really own your house, because you didn’t earn it alone. So the government should be able to take part of that.

And those 401ks? They bailed out Wall Street, they created the 401k and they should be able to make “those that have benefited the most, the privileged few” pay “a little more” to those that haven’t had “a fair shake”.

And your private healthcare? Why should those “winners of lifes’ lottery” not be willing “to help those in need” to “get a hand up” and pay for their medical needs?

When you stop and think about these Democrats (American Communists) are preaching the gospel of government being god. And THEY as it’s ministers want to forcibly take and give to the poor. And since we’re so selfish isn’t it patriotic to give more to the government?

Should we just have children and let the state raise them? Wouldn’t they do a better job?

Should we just get a monthly stipend and some rations from the local federal government store where they can help us control our diets?

Shouldn’t we turn in those that aren’t “collectively minded” if they try to get a Big Gulp or are “hoarding” to provide for their families?

EVIL, EVIL, EVIL…………….Progressivism.

PappyD61 on February 27, 2013 at 7:18 PM

…..Combine with the strong housing numbers this week and the unexpected big jump in consumer confidence on Tues…..

TouchdownBuddha on February 27, 2013 at 6:41 PM

Do you even read the reports? “Strong” housing numbers???? You’re kidding, right? An 8.9 decrease is a gain? Only in lib land.

Also, the consumer confidence numbers “big jump” was due to the “big drop” last month from the new taxes everyone experienced. I assume you failed to read that within context either.

It’s better to let everyone assume you are dumb rather than open your mouth and prove it.

goflyers on February 27, 2013 at 7:19 PM

I hope they are stupid enough to keep doing it.

Cindy Munford on February 27, 2013 at 7:04 PM

Check the headline on Drudge. This is further proof that a gang of criminals is now running the country.

TarheelBen on February 27, 2013 at 7:24 PM

Software is part of “durable goods”? Okey doke …

ThePrimordialOrderedPair on February 27, 2013 at 7:34 PM