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First Cut: January factory orders decline on both durables and nondurables

New orders for all factory goods declined 0.5% in January as orders for durables dipped 0.2% and nondurables were down 0.8%. Nondurables reflected a 4.6% decrease in the dollar value of petroleum shipments, with prices per barrel of crude down sharply and volume off as well. Durables were down mainly on weakness in transportation which declined 2.1% on a 19.6% drop in defense aircraft and an 80.9% fall in ships and boats. Orders related to defense were down substantially in January. Orders excluding defense were up 1.3% in January as opposed to down 0.4% in December. Orders excluding transportation were up 0.8% with a few sectors reviving after recent softness. Notable among  these was an 11.6% rise in orders for construction machinery at a time when residential building is robust.

“Core” new orders for durable goods — durables orders less civilian aircraft and defense capital goods — were off a small 0.1%.

Unfilled orders were flat in January. The lack of new orders for aircraft at Boeing is keeping the value of backlogs down, and orders for aircraft other than the troubled 737 MAX are still being completed and delivered.

The value of shipments was down in part on the above mentioned lower prices for petroleum. Inventories edged down 0.1% in January as new orders helped reduce stocks on hand.

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