Feb 27, 2023 - Economy

Capital spending rebounded in January

Data: U.S. Census Bureau; Chart: Axios Visuals

Seemingly every data point has shown the economy surging ahead in January, after slumping some in November and December. Now you can add capital goods orders to that list.

Driving the news: New orders for durable goods plunged in January, but that was due entirely to swings analysts anticipated in aircraft orders. Core durables, which exclude aircraft and defense, rose 0.7% in January after flatlining in November and December.

  • Core non-defense orders — a good proxy for business investment spending — surged 0.8% after falling in both November and December.

State of play: A similar pattern has played out in various data like retail sales, factory output and inflation, showing how a cooler economy late last year gave way to an early 2023 acceleration.

Yes, but: Some of this is likely attributable to seasonal adjustments calibrated based on past experience; they can create misleading results if companies and individuals shift their month-to-month spending patterns.

  • An exceptionally warm January also has contributed to last month's apparent economic strength.

At the same time, there's little doubt the evidence that a meaningful economic slowdown is underway looks shakier and shakier with each 2023 data point.

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