logo
  

U.S. Durable Goods Orders Slump Amid Sharp Pullback In Aircraft Demand

durable goods orders 012722 lt

Reflecting a sharp pullback in orders for transportation equipment, the Commerce Department released a report on Thursday showing new orders for U.S. manufactured durable goods fell by more than expected in the month of December.

The Commerce Department said durable goods orders slumped by 0.9 percent in December after soaring by an upwardly revised 3.2 percent in November.

Economists had expected durable goods orders to decrease by 0.5 percent compared to the 2.6 percent spike that had been reported for the previous month.

The bigger than expected drop in durable goods orders came as orders for transportation equipment tumbled by 3.9 percent in December after surging by 8.2 percent in November.

Orders for non-defense aircraft and parts helped lead the way lower, plummeting by 14.4 percent in December after skyrocketing by 41.9 percent in November.

Excluding the steep drop in orders for transportation equipment, durable goods orders rose by 0.4 percent in December after jumping by 1.1 percent in November. Ex-transportation orders were expected to increase by 0.5 percent.

The report showed a sharp pullback in orders for computers and electronic products, while orders for primary metals and fabricated metal products saw significant growth.

"Looking past transportation, the underlying details are generally encouraging and signal businesses maintain a 'glass half full' view of the economy in spite of Covid and ongoing operating challenges," said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

The report showed orders for non-defense capital goods excluding aircraft, a key indicator of business spending, came in flat in December after rising by 0.3 percent in November.

Meanwhile, shipments in the same category, which is the source data for equipment investment in GDP, jumped by 1.3 percent in December following a 0.4 percent increase in November.

"Looking ahead, we expect the imbalance between strong demand and limited supply to persist in 2022 as supply chain woes recede only gradually," Klachkin said.

He added, "While worse health conditions pose clear downside risks to the recovery in the near term, they could also incentivize stronger business investment as executives push to increase their resiliency and minimize the impact of future shocks, particularly from overseas."

For comments and feedback contact: editorial@rttnews.com

Business News

Follow RTT