A 6% increase in new transportation equipment orders, primarily for aircraft, drove a 1.8% increase in new durable goods orders for January. New orders for core capital goods, which exclude aircraft and defense orders, showed an unexpected 0.4% decrease after 3 months of increases, and a Y/Y gain of 0.5%. Overall shipments of existing orders were down slightly by 0.1%, but core capital goods shipments fell more steeply at 0.6%.

January’s trade deficit increased 7.6% to $69.2 billion, while December’s deficit was revised downwards to $64.4 billion. Imports rose 2.3% M/M and 8.9% Y/Y, with significant increases in consumer goods and automobile imports. Exports fell by 0.3% M/M, but rose 8.3% Y/Y, with exports of consumer goods falling by 4.6%.

The Bureau of Economic Analysis’ second estimate of GDP revised personal consumption expenditures (PCE) in Q4 upwards by 0.5% to 3.0%, with healthcare spending and vehicle purchases as the largest components. The PCE increase was balanced by downward revisions for business investment (from 3.1% to 1.9%) and warehouse inventories (from $48.7 billion to $46.2 billion), and an increase in the trade deficit. Overall, the advanced estimate’s values of 1.9% growth for Q4 and 1.6% growth for 2016 remained unchanged.