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US durable goods orders for January beat forecasts

By Alexander Bueso

Date: Wednesday 13 Mar 2019

US durable goods orders for January beat forecasts

(Sharecast News) - Orders for goods made to last longer than three years continued to growing at the start of 2019, buoyed by those for machinery and aircraft.
A closely-followed lead indicator for the underlying demand for business investment also perked-up, pointing to a less severe pace of slowdown, some - but not all - economists said.

According to the Department of Commerce, total US durable goods orders grew at a 0.4% month-on-month clip in January to reach $255.3bn.

December's reading was revised higher too, to show growth of 1.3%.

Economists had anticipated a drop of 0.8% following a preliminary reading for December of 1.0%.

Machinery orders did especially well, bouncing back by 1.4% versus December to $33bn while those for civilian aircraft and parts jumped by 15.9% to $15.69bn.

Orders for non-defence capital goods, excluding aircraft, which many analysts consider to be a reliable forward indicator for the trend in firms' capital outlays also did well, growing by 0.8% to $68.8bn.

But they had fallen sharply over the preceding two months.

Excluding those from the transportation sector, total orders declined by 0.1% on the month (consensus: 0.3%).

Commenting on the latest figures from Commerce, Michael Pearce, senior US economist at Capital Economics, said: "The rebound in underlying capital goods orders in January is still consistent with a slowdown in business equipment investment growth in the first quarter, although it suggests that slowdown will not be as sharp as signalled by some of the incoming survey evidence."

However, Ian Shepherdson at Pantheon Macroeconomics was less upbeat, telling clients: "Durable goods orders could have been worse. Will be worse, soon."

Shepherdson noted how January's bounce in core capital goods orders had followed a fall of 2.0% over the previous two months.

"Core capex orders fell at a 5.3% annualized rate in the three months to January, compared to the previous three months, the worst performance since mid-2016," he added.

"The dramatic weakening in Chinese manufacturing import orders points to sustained further declines ahead."

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