Monday Economic Report: New Durable Goods Orders Jumped by a Robust 3.4% in January

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – March 1, 2021

NAM Weekly Economic Toplines:

• New orders for durable goods jumped 3.4% in January, the strongest monthly increase since July 2020 and another sign that growth in the manufacturing sector remains very robust.On a year-over-year basis, new durable goods orders have soared 6.3% since January 2020, or 8.5% with transportation equipment excluded.

• Orders for nondefense capital goods excluding aircraft—a proxy for capital spending in the U.S. economy—rose 0.5% to $72.92 billion in January, a new record. Core capital goods spending has increased 8.4% year-over-year, as firms have ramped up activity on the brighter economic outlook.

• Manufacturers in the Dallas, Kansas City and Richmond Federal Reserve Bank districts reported strong growth in activity in February, with an optimistic outlook for the next six months. However, raw material costs rose sharply in each region due to supply chain disruptions.

• Personal income soared 10.0% in January, buoyed by stimulus checks and increased unemployment insurance from legislation enacted at year’s end. It was the largest monthly increase since April 2020. Overall, personal income has jumped 13.1% over the past 12 months. 

• Personal consumption expenditures increased 2.4% in January, ending two months of declines and the strongest reading since June 2020. This suggests that additional economic stimulus boosted spending.

• Yet, the data also suggest that Americans did not spend all of the extra personal income. The saving rate soared from 13.4% in December to 20.5% in January, an eight-month high.

• Consumer surveys provided mixed results in February. The Conference Board noted improved assessments for business conditions over the next six months, but the University of Michigan’s measure declined, especially among households earning less than $75,000 per year. 

• Initial unemployment claims totaled 730,000 for the week ending Feb. 20, a 12-week low, down from 841,000 for the week ending Feb. 13.

• New single-family home sales rose 4.3% from 885,000 units at the annual rate in December to 923,000 units in January. Over the past 12 months, new single-family home sales have jumped 19.3%, up from 774,000 units in January 2020, buoyed by low mortgage rates.

• The U.S. economy grew 4.1% at the annual rate in the fourth quarter, slightly better than the prior estimate of 4.0% growth. Real GDP is expected to rebound in 2021, especially as more Americans get vaccinated and market participants resume some semblance of normalcy in their actions. The current forecast is for 5.3% growth in 2021.

• READ FULL ECONOMIC REPORT