New Orders in Durable Goods increased +2.7% for January 2011, after last month's -0.4% decrease, which was significantly revised. In spite of the final numbers, this report is not good news. New orders in transportation equipment, which includes non-defense air-o-planes increased 27.6%. Core capital goods new orders decreased -6.9%. Core capital goods is an investment gauge for the bet the private sector is placing on America's future economic growth.

Nondefense aircraft & parts new orders jumped 4,900.0%. Yes, you read that right, it's the percentage change from December's nondefense aircraft & parts. Even for volatile aircraft this percent change is almost an absurdity. Without transportation, new orders declined -3.6% in this advance report on Durable manufactured goods.

New orders has declined 4 of the past 6 months. Stripping out orders from the defense department, new orders increased +1.9%, but this number includes absurd volatile transportation, which is driven by air-o-planes. Below is the percentage change in durable goods since January 2008.

The report data is really about volatile Aircraft & parts and hidden within is some bad news for core capital goods, the stuff to make more stuff. Realize businesses and nations just don't go out and buy a billion dollar air-o-plane every day. Computers dropped -6.8% for January, Machinery, -13%. Electronics, appliances also dropped -4.9% in new orders.

Core capital goods are a leading indicator of future economic growth. It's all of the stuff used to make other stuff, kind of an future investment in the business meter. Core capital goods excludes defense and all aircraft. New orders decreased -6.9%. Shipments in core capital goods decreased -2.0%. Two things to note, core capital goods has not recovered to 2007 levels and this is the worst contraction, after two months of increases, since January 2009.

To put the monthly percentage change in perspective, below is the graph of core capital goods, monthly percentage change going back to 2000. In January 2009, core capital goods new orders dropped -9.9% and also declined by -9.4% in December 2008.

Inventories, which also contributes to GDP, were up +0.7% in January 2011 for manufactured durable goods, with transportation inventories increasing +0.7%. Core Capital Goods inventories increased +0.5%.

Unfilled orders increased +0.5% and if one adds in unfilled orders with new orders in manufacturing, the January advance percentage increase was 3.6%.

Shipments, which contributes to the investment component of GDP, is up 0.3% in January. In core capital goods, shipments decreased -2.0%, which is not good news as an approximation and indicator on Q1 2011 GDP growth, although one month, advance, surely to be revised report, does not GDP make.

Producer's Durable Equipment (PDE) is part of the GDP investment metric, the I in GDP or nonresidential fixed investment. It is not all, but part of the total investment categories for GDP, usually contributing about 50% to the total investment metric (except recently where inventories have been the dominant factor).

Producer's Durable Equipment (PDE) is about 75%, or 3/4th of the durable goods core capital goods shipments, used as an approximation.

Here is last month's advance report, unrevised.

What is a durable good? It's stuff manufactured that's supposed to last at least 3 years. Yeah, right, laptops and cell phones.