LIVE MARKETS-Factory orders chilled in December

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FACTORY ORDERS CHILLED IN DECEMBER

Investors dug themselves out of the dual headaches of a major blizzard and the unwelcome resurrection of tariff-related uncertainties on Monday to find a lone economic report waiting for them courtesy of the Commerce Department.

New orders for U.S. factory-made merchandise USFORD=ECI dropped by 0.7% in December, a slightly steeper decline than the -0.6% analysts expected and marking a partial pullback from November's 2.7% gain.

Once again, the fault is in the planes.

Shoveling below the headline, a 24.8% drop in orders for commercial aircraft was mitigated by a 22.0% jump in defense-related capital goods. Excluding transportation items, new orders would have increased by 0.4%. Excluding defense, they would have dropped by 1.2%.

A 1.1% increase in autos/parts and a 3.1% rise in computers/electronics also helped soften the drop.

As shown in the graphic below, new factory orders have been hovering in the $600 billion area since mid-2022, the same period of time during which the Institute for Supply Management's manufacturing PMI has languished, for the most part, in contraction territory.

But the ISM PMI bounded back into expansion in January for the first time in a year, suggesting factories might have started 2026 on a brighter note.

"The New Orders Index expanded for the first time since August," said Susan Spence, Chair of ISM's Manufacturing Business Survey Committee, who added that January's reading was "its highest since February 2022."

On another positive note, new orders for core capital goods - which exclude aircraft and defense items and are considered a barometer of U.S. corporate capex plans - were revised higher to 0.8% from the previously stated 0.6% gain.

(Stephen Culp)

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