Data released on Monday showed Durable Goods Orders dropped 4.5% in January, more than the 4% slide expected. Analysts at Wells Fargo point out that despite the headline, the report adds to a string of strong data for the month. 

Another headfake from Durables headline, Core Orders rebound

“The 4.5% drop in durable goods orders for January has as much to do with the volatile aircraft component as the 5.1% gain did in December. Indeed, nondefense aircraft orders slid 55% in January after surging 106% the month prior.”

“The pickup in durables adds to a string of strong economic data for January. All major categories beyond transportation and communications equipment saw a pickup in orders last month. Computers saw the largest gain, rising 7% during the month, while machinery equipment experienced a rebound of 1.6% after a larger 2.2% decline in December.”

“As supply chains have eased and new demand has begun to slow, manufacturers have been able to chip away at orders, while some businesses have likely canceled past orders all together. To the extent we see demand continue to falter in coming months, there isn't as much backlog to sustain activity.”