Headline Durable Goods New Orders Improved In January 2019 But The Rolling Averages Declined

The headlines say the durable goods new orders improved. Our analysis shows the rolling averages continued its decline.

Analyst Opinion of the Durable Goods Situation

In the adjusted data, the strengths were defense and civilian aircraft. This series has wide swings monthly so our primary metric is the unadjusted three month rolling average - which insignificantly declined but maybe still growing faster than GDP if 4Q2018 GDP is ever issued). The rate of growth of the rolling averages is below the values seen over the last year.

Econintersect Analysis:

  • unadjusted new orders growth accelerated 4.1 % (after decelerating 1.4 % the previous month) month-over-month and is up 7.8 % year-over-year.
  • the three month rolling average for unadjusted new orders decelerated 0.1 % month-over-month, and up 5.6 % year-over-year.

Year-over-Year Change of 3 Month Rolling Average - Unadjusted (blue line) and Inflation Adjusted (red line)

 

z durable1.png

  • Inflation-adjusted but otherwise unadjusted new orders are up 5.6 % year-over-year.
  • Backlog (unfilled orders) accelerated 0.3 % month-over-month, and is up 4.1 % year-over-year.
  • The Federal Reserve's Durable Goods Industrial Production Index (seasonally adjusted) growth down 1.7 % month-over-month, up 3.9 % year-over-year [note that this is a series with moderate backward revision - and it uses production as a pulse point (not new orders or shipments)] - three-month trend is decelerating.

Comparing Seasonally Adjusted Durable Goods Shipments (blue line) to Industrial Production Durable Goods (red line)

 

  • note this is labeled as an advance report - however, backward revisions historically are relatively slight.

Census Headlines:

  • new orders up 0.4 % month-over-month.
  • backlog (unfilled orders) up 0.1 % month-over-month.
  • the market expected (from Econoday):
  Consensus Range Consensus Actual
New Orders - M/M change -3.0 % to 1.8 % -0.8 % +0.4 %
Ex-transportation - M/M -0.1 % to 0.3 % +0.1 % -0.1 %
Core capital goods - M/M change -0.1 % to 0.1 % +0.1 % +0.8 %
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