Durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. The first release, the advance, provides an early estimate of durable goods orders. About two weeks later, more complete and revised data are available in the factory orders report. The data for the previous month are usually revised a second time upon the release of the new month's data. (Bureau of the Census, U.S. Department of Commerce) Why Investors Care
| Released on 7/26/07 For Jun 2007 | ||||||||||||
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Highlights
Durable goods orders rebounded in June but not as much as expected. Durable goods orders rebounded 1.4 percent in June, following a 2.3 percent drop in May. June's figure was below the consensus projection for a 2.0 percent increase in new durables orders. May's number was revised up incrementally from the previous estimate of a 2.4 percent decline. Excluding the volatile transportation component, new orders continued to decline, falling 0.5 percent in May, following a 0.2 percent dip the prior month. Excluding defense, new durables orders posted a 1.9 percent increase, following a 2.7 percent decrease in May.
Strength in durables orders in June was mixed but overall continued an upward trend in recent months. Industry categories posting gains in June were fabricated metal products, up 1.7 percent; machinery, up 2.6 percent; electrical equipment, up 1.5 percent; and transportation, up 6.1 percent. Industry categories showing declines in June were primary metals, down 3.6 percent; computers & electronics, down 4.6 percent; and "other," down 0.3 percent.
Within transportation, nondefense aircraft jumped 28.7 percent, defense aircraft advanced 9.9 percent, and motor vehicles fell 1.4 percent.
Nondefense capital goods orders rose 4.6 in June, following 6.8 percent decline in May. Excluding aircraft, nondefense capital goods orders slipped 0.7 in June, following a 1.5 percent decline the prior month.
Overall inventories of durable goods edged up 0.2 percent in June, following a 0.1 percent rise in May. Overall shipments fell 1.1 percent in June while unfilled orders posted a 1.5 percent boost. Shipments of non-defense capital goods slipped 0.1 in June, following a 0.6 percent increase the previous month.
Today's report questions some of the strength in manufacturing seen in some manufacturing surveys and in the Fed's Beige Book. However, the durables orders numbers are a volatile series. Additionally, overall orders are up in four of the last five months. Instead of overreacting to today's mixed numbers, it is probably best to focus on the overall uptrend and wait on more data for this sector. Nonetheless, the numbers are likely to weigh on equities except that initial jobless claims this morning pointed toward a healthy labor market. The bond market will be debating which way to go between the two reports.
Durable goods orders fell 2.8 percent in May but followed three consecutive increases, including a robust 5.1 percent surge in March. Excluding transportation, durables orders declines 0.4 percent in May, following a 2.3 percent jump in April. Recent manufacturing surveys have shown strong orders indexes - notably ISM and Empire State - suggesting that we may see the same in the Census data for durables orders.
New orders for durable goods Consensus Forecast for June 07: +2.0 percent
Range: +1.1 percent to +3.5 percent
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Monthly fluctuations in durable goods orders are frequent and large and skew the underlying trend in the data. In fact, even the yearly change must be viewed carefully because of the volatility in this series. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
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