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 1/29/08 For Dec 2007 | ||||||||||||
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Highlights
Durable goods orders in December came in surprisingly strong and should help soothe recession fears. Durable goods orders surged 5.2 percent in December, following a 0.5 percent rise in November. The boost in December was sharply above the market forecast for a 1.6 percent gain in new durables orders. While December's jump in orders was led by aircraft, strength was notable in many components. Even excluding the transportation component, new orders advanced a robust 2.6 percent in December, following a 0.4 percent fall in November. Today's report indicates that manufacturing is more resilient than most believed. The durables numbers were the last relatively up-to-date data that the Fed will see before its policy vote tomorrow (not counting the somewhat dated GDP report tomorrow) and could give the Fed pause on too big of a rate cut.
Industries that were positive in December were fabricated metals, up 2.8 percent; machinery, up 7.6 percent; computers & electronics, up 4.6 percent; and transportation, up 11.3 percent.
Industry categories showing declines in December were primary metal products, down 0.2 percent, and electrical, down 1.4 percent.
Nondefense capital goods orders increased a hefty 5.4 percent in December, after jumping 5.3 percent in November. Shipments of nondefense capital goods finally picked back up after some weak months, rebounding 1.7 percent in December after slipping 0.3 percent in November.
Year-on-year, new orders for durable goods rose to up 3.7 percent in December from up 0.2 percent in November. Year-on-year unfilled orders rose to up 18.2 percent in December from up 17.1 percent the prior month.
Today's report will dampen the spirits of the recession mongers and brighten that of those paying attention to the fact that moderate growth is a good thing even if it means the Fed may pull back on how deep further rate cuts may be. For today at least, manufacturing is not in recession. Bond yields rose on the report as did stock futures.
Durable goods orders have been on a down trend. Durable goods orders slipped 0.1 percent in November, following a 0.5 percent drop in October. New durables orders have fallen for four consecutive months. Markets should watch this indicator closely - durables orders typically lead changes in the business cycle.
New orders for durable goods Consensus Forecast for December 07: +1.6 percent
Range: -0.1 percent to +5.0 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. |
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