Pragmatic Capitalism

Practical Views on Money & Finance

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:

Got a comment or question? Feel free to contact Cullen via email here or on Twitter here.
Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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