Durable Goods Confirm Strong PMI Readings in USA

Another strong reading in durable goods orders this morning.  This is important for two reasons:

1.  It confirms the recent strong PMI readings we’ve seen from the Markit PMI reports in the USA.

2.  Durable goods tend to have a very strong correlation with the S&P 500 (see chart below).

Econoday has the details on today’s report:

Manufacturing may be regaining momentum. While civilian aircraft added huge lift to December durables orders, gains were broad based. New factory orders for durables in December jumped a monthly 4.6 percent, following a boost of 0.7 percent in November. The median market forecast was for a 1.6 percent increase. The transportation component spiked 11.9 percent after a 0.5 percent dip in November. Excluding transportation, durables orders increased 1.3 percent, following a rise of 1.2 percent in November. The consensus called for a 0.4 percent rise in orders excluding transportation.

Outside of transportation, component increases were led by primarily metals, up 3.6 percent, and computers & electronics, up 3.3 percent. Also rising were fabricated metals, machinery, and “other.” The only negative component was electrical equipment, down 2.4 percent.

Chart via Orcam Financial Group:


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • InvestorX

    A nice chart, thanks ;-)

  • Andrea Malagoli

    The reading on the US Debt will be just as strong, if not stronger …

  • Boston Larry

    Only up 0.2% by one measure. “Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines and communications gear, increased 0.2 percent following gains of 3 percent in November and October. The Defense Dept was trying to beat sequestration as: “The durable goods data were boosted by a 56.4 percent surge in bookings for military aircraft, according to the Commerce Department’s report. Not as stellar when you take this out, which is more indicative of the future.

  • AWF

    Reports on Durable goods = Pump and Hump

    who’s getting the hump?

  • alan

    How do you reconcile this with the lower Chicago Fed nat’l activity

  • http://www.nowandfutures.com bart

    The annual change rate trend, although still positive, on PMI is quite poor.

    6/1/12 7.8%
    7/1/12 3.9%
    8/1/12 -6.6%
    9/1/12 1.8%
    10/1/12 3.4%
    11/1/12 0.7%
    12/1/12 0.2%

  • Ted

    And that matters why?

  • kman

    Being a chart watcher and looking at that S&P chart, it’s hard to be positive. It’s just rare that the SP500 would take out the tops from the past decade and move higher, especially coming right off the bootom of 09. This just does not happen without a longer form of basing. Of course it’s off topic but just thought I’d share the momentary observation.

  • Andrea Malagoli

    Because ignoring the growth of credit is a critical mistake in understanding economic cycles.

  • Gary_UK

    What a huge surprise (to you, not me), GDP DOWN in Q4.

    Mea culpa then Cullen?

    Down, get used to it.

    Recession looms.

  • Johnny Evers

    Forget predicting the future; we can’t even ‘predict’ the previous quarter.

  • Gary_UK

    Tumbleweed cascades through the plains of PragCap as the host ponders how to backtrack on his very recent bout of trumpet-blowing on his ‘no recession’ call.

    Life’s a bitch eh? (but some shiny stuff is up $20 an ounce today on the (belated) realisation that Bennieboy won’t be removing the punchbowl (ever, not until dollar-collapse day).

    Happy days for those of us not using rose-coloured spectacles.