New orders for U.S.-made durable goods plunged 10.2% in January as aircraft orders dried up after three months of strength, the Commerce Department reported Friday.
The decline was the largest since July 2000 and far exceeded the 2.5% drop expected by economists surveyed by MarketWatch. Orders in December rose a revised 2.5%, up from 1.8% previously reported. January's orders were 5.7% higher than in January 2005. The weakness in durables is not likely to be a major factor for the Federal Reserve in its deliberations later next month about whether to raise interest rates.
The Fed remains focused on inflation, consumer spending and housing, figuring that business investment will remain relatively healthy despite monthly zigs and zags in the data. Aircraft orders fell 68.2% in January after averaging more than three times the normal level from October through December. Even with the decline, aircraft orders were above average in January. Total transportation orders fell 31.2%, the biggest decline since July 2000.
Defense capital goods orders also plunged in January, falling 64.3%, the biggest drop since November 2001. Core capital goods orders - which exclude defense and noncivilian aircraft - dropped 0.4% after a 5% gain in December. Shipments of core capital equipment rose 0.2% after rising 3.8% in December. Shipments of durable goods fell 1.3% in January after a 4.1% gain in December.
Unfilled orders dropped 0.8% in January after rising 2.6% in December. Inventories rose 0.3% in January after rising 0.1% in December.
Looking at individual sectors, orders for machinery fell 2.5% after a 9.5% gain in December. Shipments of machinery fell 0.7%. Orders for computers and electronics other than semiconductors fell 0.4%. Shipments of all electronics fell 1.2%, including a 7.5% drop in semiconductors.
Orders for transportation goods fell 31.2% on the drop in aircraft. Orders for motor vehicles fell 3.3% after a 6.5% increase in December. Orders for primary metals increased 0.4%. Orders for fabricated metals rose 0.6%.