Highlights
The durables report has lived up to its reputation as one of the most volatile indicators. Taking into account upward revisions to December numbers, January numbers look decent. At the headline level, new orders for durable goods in January posted a healthy 3.0 percent gain, following a revised 1.9 percent rebound in December. The December increase had previously been estimated to be 0.3 percent. The latest number topped expectations, compared to analysts' forecasts for a 1.5 percent boost. But we have a different picture for January excluding transportation. Excluding the transportation component, new durables orders fell 0.6 percent after a 2.0 percent gain in December. But the ex-transportation component was revised up for December from the original 0.9 percent rise. Overall, the headline number exaggerates strength but the core number is OK for such a volatile series after the upward revision to December.

Transportation spiked 15.6 percent in January after a 1.5 percent rise the month before. For the latest month, nondefense aircraft surged a monthly 126.0 percent; defense aircraft rose 11.6 percent; and motor vehicles slipped 2.2 percent.

Looking at core components, weakness was rather narrow-most components posted gains. The 0.6 percent dip in durables excluding transportation was led by a sharp 9.7 drop in new orders for machinery after a 7.4 percent rise in December. Also slipping in the latest month was the "all other" component. But gains in the core were widespread with computers & electronics up 4.6 percent and communications equipment rising 3.1 percent. Also improving were primary metals, and electrical equipment. Fabricated metals were flat for January.

Nondefense capital goods orders excluding aircraft have had a bumpy ride lately, dropping 2.9 percent in January after rising 3.3 percent in December. Still, the trend has been moderately upward.

Year-on-year, overall new orders for durable goods jumped to plus 10.2 percent in January from minus 1.6 percent the prior month. Excluding transportation, new durables orders improved to up 8.6 percent from up 1.5 percent in December.

Overall, manufacturing continues to be supported by a moderate upward trend in durables orders. Equities should like today's number but weighing on stocks is an unexpected jump in initial jobless claims.

Market Consensus before announcement
Durable goods orders rebounded 1.0 percent after a 0.4 percent drop in November. But December was held back by the lack of a rebound in Boeing orders. Excluding the transportation component, however, new durables orders were much healthier, advancing another 1.4 percent, following a 2.0 percent rebound in November. Also, there is an indication of growing optimism by businesses. Nondefense capital goods orders excluding aircraft increased 2.2 percent in December after jumping 3.2 percent in November. Excluding the weakness in civilian aircraft, December durables report was moderately positive overall. Looking ahead, early indicators suggest that January momentum is mixed. The ISM manufacturing new orders index advanced to a high positive as did the same index for the Empire State report. However, the Philly Fed new orders index slipped sharply in January but remained in positive territory.

2010 Release Schedule

Released On: 1/28 2/25 3/24 4/23 5/26 6/24 7/28 8/25 9/24 10/27 11/24 12/23 Release For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov