After reporting a bigger than expected jump in orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report on Tuesday showing durable goods orders pulled back by more than expected in January.
The Commerce Department said durable goods orders plunged by 3.7 percent in January after surging up by a revised 2.6 percent in December.
Economists had expected durable goods orders to drop by 2.0 percent compared to the 2.8 percent jump that had been reported for the previous month.
The bigger than expected decrease in durable goods orders was primarily due to a sharp pullback in orders for transportation equipment, which slumped by 10.0 percent in January after spiking by 6.4 percent in December.
Orders for non-defense aircraft and parts plummeted by 28.4 percent in January after soaring by 16.1 percent in December, while orders for defense aircraft and parts dove by 45.6 percent after shooting up by 47.8 percent.
Excluding orders for transportation equipment, durable goods orders edged down by 0.3 percent in January compared to the 0.7 percent increase in the previous month. Ex-transportation orders had been expected to rise by 0.4 percent.
The unexpected drop in ex-transportation orders reflected decreases in orders for machinery, primary metals, and electrical equipment, appliances, and components.
The report also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, dipped by 0.2 percent in January after falling by 0.6 percent in December.
Andrew Hunter, U.S. Economist at Capital Economics, said, “Looking ahead, although some measures of capex intentions remain at a high level, the latest business surveys point to a further slowdown in underlying durable goods orders.”
“That said, with the strong global backdrop set to continue benefiting manufacturers and the recent tax cuts likely to provide some further support, we still expect business investment to expand at a healthy pace over 2018 as a whole,” he added.
The Commerce Department also said shipments of durable goods crept up by 0.2 percent in January after rising by 0.5 percent in December.