US Durable Goods Orders Plunge in January, Reflecting Unprecedented Volatility

The recent months have seen notable volatility in US durable goods orders, particularly evident in the preliminary January data, which revealed a significant 6.1% month-over-month decline in headline orders.

This drop exceeded the already pessimistic expectation of a 5% decrease, marking the most substantial month-over-month downturn since the peak of the COVID lockdowns in April 2020. Consequently, year-over-year orders growth dipped to -0.8%, the lowest level and first annual contraction since August 2020.

Excluding transportation equipment, orders experienced a more modest 0.3% decline. Notably, non-defense aircraft orders suffered a sharp 58.5% month-over-month decrease, the worst performance since 2019, while increased war-related spending partially offset this decline with a 24.2% month-over-month rise.

Furthermore, core capital goods shipments, a critical indicator used to gauge equipment investment in the government's gross domestic product report, rebounded following a contraction in December.