New Orders in Durable Goods dropped -2.5% for December 2010, after last month's -0.1% decrease, which was significantly revised. New orders has declined 4 of the past 5 months. New orders in non-defense capital goods decreased -6.3%. Core capital goods new orders increased 1.4%. Nondefense aircraft & parts new orders dropped -99.5%. Even for volatile aircraft that's an astounding drop.

Below is the percentage change in durable goods since January 2008.

The report data is really about volatile Aircraft & parts and also appears to be a reclassification from November to December for the dates. Realize businesses and nations just don't go out and buy a billion dollar air-o-plane every day. Transportation equipment alone dropped -12.8% in December, but autos, part of transportation, increased 1.7% in December new orders. Non-defense Aircraft, new orders were only down -99.5% [sic], while defense aircraft new orders down -10.9%. Computer new orders decreased -11.2%, with the general category electronics plus computers new orders decreased -0.1%.

Excluding transportation, new orders increased 0.5%.

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 increased 1.4%. Shipments in core capital goods increased +1.0%. Two things to note, core capital goods has not recovered to 2007 levels but this is two months for an increase.

Inventories, which also contributes to GDP, were up +0.7% in December 2010 for manufactured durable goods, with transportation inventories increasing +1.9%. Excluding transportation inventories increased +0.2%. Core Capital Goods inventories decreased -0.1%. Unfilled orders were down overall for December -0.4%.

Shipments, which contributes to the investment component of GDP, is up 1.4% in December. Transportation equipment shipments increased 2.5%. Non-defense capital goods shipments increased 2.8%. In core capital goods, shipments increased 1.7%, November was +1.4 and October -1.0%, this is better news as an approximation and indicator on Q4 2010 GDP growth.

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. Therefore, we see some good news here with a +1.7% increase in core capital goods shipments, to guesstimate PDE, which is part of the GDP investment component, yet 37.5% is not 100%. Taking the Q4 quarter, this would be a +0.7% increase.

Here is last month's 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.