US durable goods orders bounce back in January

US durable goods orders bounced back in January but an underlying proxy for trends in investment in the wider economy was still well in the red.

Orders for goods made to last more than three years grew by 4.9% month-on-month in January to reach $237.47bn, according to the US Department of Commerce, following a fall of 4.6% in the month before.

That was comfortably ahead of forecasts from economists for a rise of 2.5%.

The largest month-on-month increases were recorded in orders for non-defence aircraft and parts and defence aircraft and parts, which rose by 54.2% and 84.8% each.

Orders for machinery and automobiles and parts also sported large gains, growing by 6.9% to $33.03bn and 3.0% to $53.76bn, respectively.

In comparison to January of last year total orders for durable goods showend an increase of 0.6%.

Excluding orders from the transportation sector, total orders increased 1.8% over the month after a dip of 0.7% in December 2015.

If the defence sector were excluded instead then orders showed a gain of 4.5% following a decline of 2.5% in the previous month.

Nevertheless, orders for capital goods excluding both defence and aircraft, which was widely considered a good proxy for investment 3.9% over the month (consensus: 1.0%) to reach $69.02bn but were down 4.4% year-on-year.

"Despite the stronger-than-expected outturn in this morning’s report, our outlook for the manufacturing sector remains unchanged; we continue to expect a slow grind lower in output and employment growth driven by past appreciation of the dollar and weak foreign demand. That said, a solid rebound in orders and shipments at the beginning of Q1 sets up for more favorable sequential growth numbers at the beginning of 2016," Barclays´s Jesse Hurwitz said in a research report sent to clients.

Steve Murphy, US economist at Capital Economics, was more optimistic, telling clients: "The 4.9% m/m increase in durable goods orders in January was flattered by a strong rebound in the notoriously volatile aircraft component, but details of the report bode well for equipment investment in the first quarter and should quell fears that the US economy is heading for a recession."