Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Look past the aircraft-related decline in durable goods orders to see a rather encouraging uptick in demand for core capital goods where both orders and shipments rose more than expected in December on the heels of upward revisions
.I Want to Get Away, I Want to Fly Away
The December durable goods data weren’t as bad as they look. Overall orders slipped 2.2% during the month and brought downward revisions to November revealing another 2% decline. But most of this weakness can be traced to aircraft orders specifically. Excluding broad transportation, orders were up 0.3% in December. This somewhat surprised us given Boeing already reported a near-tripling in aircraft orders between November and December, yet the durables release signaled a contraction of more than 45% in new orders for aircraft during the month. This may partly reflect cancellations and a weaker net orders trend we estimate out of Boeing in recent months, as the company recovers from strike-related challenges from earlier in the year.