U.S Durable Goods Rebound in January

Orders for U.S. durable goods rebounded in January, a sign companies were feeling encouraged to invest at the start of the year as the economy improved.

Bookings for goods meant to last at least three years rose

1.8 percent after a 0.8 percent decrease in December, Commerce Department data showed Monday. Bookings for non-military capital goods excluding aircraft — a proxy for future business investment — unexpectedly fell 0.4 percent after a 1.1 percent jump in the prior month that was larger than previously estimated.

Before January, demand for business equipment had shown marked improvement as companies grew more upbeat about the economy’s prospects and global markets began recovering. Faster growth, along with corporate tax reform and reduced regulations may spur investment, which has been a laggard during the current economic expansion.

Dollar Crippled by Trumps Inaction

Even with the decline, bookings for capital equipment increased at an 8.9 percent annualized pace over the three months ended in January. Such investment includes machinery, computers and communications gear.

The median forecast of economists surveyed by Bloomberg for total durable goods called for a 1.6 percent gain. Economists’ estimates ranged from a drop of 1 percent to a gain of 4 percent. The prior month was initially reported as a decline of 0.5 percent.

Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, fell 0.6 percent after rising 1.6 percent.

Commercial Aircraft

The durables report also showed bookings for commercial aircraft jumped 69.9 percent after a 9.3 percent increase.

Excluding transportation equipment, which is often volatile from month to month, orders fell 0.2 percent after a 0.9 percent gain. They were projected to climb 0.5 percent, according to the Bloomberg survey median.

Orders for military capital equipment rose 8 percent, and demand for non-defense durable goods increased 1.5 percent.

USD/CAD – Canadian Dollar Unchanged as US Durables Mixed

Durable goods inventories were little changed, while unfilled orders for non-defense capital goods excluding aircraft rose 0.5 percent.

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell