Factory orders swung up and down in January and December, falling 1.6 percent at the beginning of the year after rising a revised 1.7 percent at the end of the year. The swing isn't all due to aircraft as January orders excluding transportation equipment rose 1.2 percent to precisely offset a 1.2 percent decline in December.

But the verdict isn't flat at all. A big positive that makes January a strong month is core capital goods orders (nondefense aircraft). These jumped an outsized 0.8 percent that gets business investment off to a great first-quarter start. Keys here are a 7.0 percent surge in computers and related products and a 1.6 percent jump in machinery orders led by industrial machinery.

Orders for nondurable goods, which are always sensitive to monthly swings in petroleum-based products, rose 1.5 percent following declines of 1.7 and 2.1 percent in the two prior months. Orders for durable goods are unrevised at last week's initial decline of 4.5 percent.

Other details to note include a 54.5 percent swing lower for commercial aircraft following December's 105.6 percent jump, and a 1.4 percent rise for motor vehicles bodies, parts, and trailers that follows a 0.7 percent December decline. January's rise for the latter offers further evidence of new supply underway for the auto industry. Total shipments rose 0.7 percent in January, total unfilled orders as well as total inventories were unchanged.

Because of capital goods, this report is in the favorable category unlike contraction underway in manufacturing business surveys including the ISM. This contrast is sometimes glaring and leaves the outlook for US manufacturing up in the air. Today's results are slightly better than expected and help to lift Econoday's Consensus Divergence Index which stands at minus 6, only just in the negative column to indicate that US data on the whole are coming in marginally lower than expected.

Factory orders are expected to fall 1.8 percent in January versus December's 1.8 percent rise. Durable goods orders for January, which have already been released and are one of two major components of this report, fell 4.5 percent in the month reflecting a monthly downswing for aircraft.

Factory orders represent the dollar level of new orders for both durable and nondurable goods. This report gives more complete information than the advance durable goods report which is released one or two weeks earlier in the month.

Investors want to keep their fingers on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth which is less likely to cause inflationary pressures. By tracking economic data like factory orders, investors will know what the economic backdrop is for these markets and their portfolios. The orders data show how busy factories will be in coming months as manufacturers work to fill those orders. This report provides insight to the demand for not only hard goods such as refrigerators and cars, but nondurables such as cigarettes and apparel. In addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current and future production. All in all, this report tells investors what to expect from the manufacturing sector, a major component of the economy and therefore a major influence on their investments.